Could Apple Be A Direct Sales Ally To Tesla?

1 year ago by Steven Loveday 18

Tesla Fremont Assembly Factory

Tesla Fremont Factory

Apple is possibly on the brink of making an electric vehicle. Like Tesla, if it enters the market, Apple will rely solely on direct sales. And with Tesla’s direct sales model back in the news, perhaps Apple’s entry into the electric car segment can’t come soon enough.

Tesla has been using direct sales from its inception. There has been much animosity toward this method of business and there are even bills written to advocate against it. Lobbyists are doing everything they can to try to push Tesla out of their jurisdictions or force them to move to traditional, dealership based sales.

Apple Car Concept

Apple Car Concept

Why the negativity from traditional dealers?

  • Electric vehicles require less maintenance (less dealer service center profit)
  • The “middle man” is eliminated
  • Commission and pressure based systems are undermined
  • No dealer markup, competition, and haggling
  • More internet sales means less real estate cost

Apple has a much larger customer base than Tesla and if it moves into the electric car market, it can only help Tesla’s initiative. Apple has been successful at rallying public support and pushing their concept to curb lawmakers.

The two companies share many other similarities when it comes to how they run their business model. Like Apple, Tesla has a high level of demand. It doesn’t need to build inventory, and buyers are more than willing to put down a deposit and wait months for their car.

Tim Cook, chief executive officer of Apple, says:

“Inventory is evil. Not just evil, but fundamentally evil.”

Apple customers order customized computers on its website that are then direct-shipped to the consumer. In the electric car market, Apple is expected to handle sales similarly. Apple would likely have no issue with marketing and generating demand due to its substantial advertising base and brand exclusivity. Tesla doesn’t advertise in any of the traditional ways.

The bottom line for both companies, and for any company really, is to provide a great product and educate people. The product will essentially “sell itself.” Sales staff at both Apple and Tesla are not trained primarily as salespeople. Instead, they are trained to have a vast education of the product. Buyers have many questions as the market is so new. The job of the staff is to assure that the buyer is made aware and comfortable concerning the purchase, and not create pressure.

With the help of Apple, could Tesla succeed in making direct sales the future of the auto industry?

Source: The Motley Fool

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18 responses to "Could Apple Be A Direct Sales Ally To Tesla?"

  1. Three Electrics says:

    Apple does direct sales, but they dont rely *solely* on direct sales. I can buy Apple products at Best Buy, for example.

    1. Eric says:

      Of course. Apple doesn’t care about Best Buy handling the evilness of its own inventory itself.

    2. jelloslug says:

      I’m sure if some company want to buy a bunch of Telsas and then sell them out of inventory to customers Tesla would be happy to make the cars for them.

      1. Anon says:

        They haven’t been encouraging those kinds of sales… Direct sales customers have always had priority over fleet sales, at this time.

        Maybe in the near future, when they’re cranking out over 250,000 cars a year?

    3. Apple largely relies on sales in the big mobile network provider stores, that is very much a dealer network.

  2. Ian says:

    Apple buys Chevy/GM, stops all anti EV bills that Chevy was starting. Hmmm

    1. Gene says:

      I don’t think Apple would take GM even if you gave it to them for free. All those stranded assets would be a huge liability.

      1. Anon says:

        Gm is having problems finding ways to fund their worker’s pensions, too.

    2. Will says:

      Apple wouldn’t need to buy GM; they could drive direct-sales support simply by being 😛

  3. Direct auto sales have roadblocks in N.America mostly due to ~50 years of lobbying by members of the National Auto Dealers Association.

    Both Apple and Tesla are global companies with distribution to many countries.

    In future there may be additional manufactures and non-dealer dustributurrs of EVs.
    eg: What if you could order an EV directly online (perhaps from China, or Europe), delivered direct to your driveway? Instead of visiting a dealer to test drive before buying; you reserve a number of trips in the vehicle model from a local rideshare service.

    While manufactures can not obtain business licenses to operate a sales location in many a U.S. state, a manufacture can establish a service center, or operate a car-sharing service.

    1. Of note … if just one state in U.S. allowed direct auto sales by manufactures; that state would see great economic benefit by consumers traveling to that state!

      The economic win for the first state(s) to allow direct sales by manufactures would be like hosting a SuperBowl every day of the year.

      For a manufacture making autonmous vehicles … a buyer could fly out to state for a day, test and buy before flying home. Once their new vehicle is configured, it would just drive itself to its new home! This not so far fetched as many manufactures have announce autonmous vehicles by 2020.

    2. Lindsay Patten says:

      Canada doesn’t have laws against car companies opening up their own stores, Tesla and Mercedes Benz have factory stores.

      US != N. America

      1. Eric says:

        A lot of the U.S. has no problem with Tesla’s direct sales. Here in California, I have plans to put down a reservation when the Pasadena, CA store opens at 9:00 AM on March 31st.

        If Apple wanted to sale cars directly in Arizona, it could easily adopt an all-or-nothing policy, in which it refuses to do any business in locales where it can’t conduct all of its business. That would probably be to the detriment of millions of tax dollars going across state lines to California or Nevada.

  4. Zukidrvr says:

    Many of the new, larger Apple stores could easily display a full sized car. Man, what a draw that would be! (I’m sure they know it and planned it that way.)

    They will be able to showcase the design in an environment that looks like a gallery. They will be able to show how it seamlessly integrates with their other products such as the iPhone and Apple Watch.

    It’s going to be exciting.

  5. Michael Will says:

    Except there is no apple car yet.

  6. Stephen says:

    I think Tesla has proven that “Electric vehicles require less maintenance (less dealer service center profit)” is not necessarily true.

    IMO it all about losing the middle men and they’re not happy.

  7. Chris O says:

    It’s not so much the car dealers that worry about direct sales, not from EVs anyway which they have no interest in selling anyway. Behind the cardealer façade of the legal war against Tesla the name “GM” keeps popping up as a much more fanatical source of anti-Tesla initiatives than the cardealers.

    Clearly GM has identified Tesla as a clear and present danger to its long term interests.

  8. The dealers don’t worry because they are so clueless how fast things are changing. Ignorance is bliss. It’s not digital vs analog its digital vs pencil and paper.

    Despite what GM likes to say they are building an inferior product. In their CEO’s own words “Crappy Cars”.