Passion is an important factor in Tesla’s success. The company goes out of its way to hire passionate people in general, but also people passionate about the company’s mission to accelerate the advent of renewable transport and energy. That wasn’t ever more obvious than today after a Tesla store manager broke down into tears during her testimony before the Indiana’s Road and Transportation Committee.
As we reported yesterday, Indiana’s legislature is introducing a new bill acutely aimed to kill Tesla’s direct sales business model in the state. If it passes, it would result in Tesla having to stop its retail and service operations in the state.
It is the third time in three years that the state legislature is trying to push a new legislation to make it impossible for automakers to sell directly to consumers in the state and to force them to go through third-party dealerships.
State Rep. Ed Soliday is introducing the bill and he insists that it’s not about Tesla, but it’s a hard sale when it’s currently the only company that would be affected by the legislation.
“Nevermind that sawdust coming out of the transmission” – in car dealer speak.
State bans of direct automotive sales were first implemented to protect car dealer franchisees from having to unfairly compete against the automakers from which they bought their franchises. It makes sense in that antiquated scenario, but the competition is not unfair if it’s against an automaker that is not competing with its own franchises, like Tesla.
Indiana currently follows the same logic and allows new automakers to sell directly to customers, but since it currently only affects Tesla, dealerships and automakers are backing legislative efforts to broaden the ban and maintain the monopoly on car sales.
The state committee on Road and Transportation held a hearing today to give a chance for the public to comment on the issue. I watched the whole thing and as usual, it’s quite entertaining to listen to politicians and dealership representatives justify what is a clear violation of the free market philosophy that they all swear to follow.
We will update with a video of the hearing when available, but here’s a short summary of the highlights.
It’s worth highlighting that every single person who came up in support for the bill worked for the car dealer industry except for one, the CEO of a local Boys and Girls Club who claimed to be supporting the bill – though he disclosed that his organization received millions of dollars from the local automotive industry. More on that later.
Everyone else asked the committee to kill the bill. Those people were regular consumers and Tesla representatives. Not a single consumer showed up in support of the bill, which makes sense considering it would limit choices for consumers and force them to only buy vehicles through third-party dealerships.
The first person to speak was Tesla’s Indianapolis store manager, Rachel Dotson (update: we added her speech below). She explained why she left her job in the high-end fashion retail industry to join Tesla. She described Tesla’s retail strategy as being more about educating the consumers about electric transportation than high-pressure sales.
A mystery shopper study from last year gives reason to her argument. The study found that Tesla store employees act more like ‘museum curators’ than salesmen.
Dotson was so passionate about her job in her speech before the committee that she teared up at the end of it.
In the past, Tesla CEO Elon Musk also got emotional about the issue of dealerships trying to block direct sales, which he described as a “perversion of democracy”. Here he is at the 2013 Tesla shareholder meeting:
It was a sharp contrast with the following public comments from wealthy individuals trying to maintain the monopoly on car sales.
At one point, Soliday was insulted when someone suggested that other automakers, especially GM, were behind the legislation, but he admitted that he spoke with the company last year when he tried to push a similar bill. At the time, Tesla described the effort as being backed by GM.
Unsurprisingly, one of the people who showed up in support of the bill was a representative of a U.S. automaker lobbying group that GM is part of.
Of course, several dealership owners spoke at the hearing and expressed their support for the bill. They were not able to explain why it would protect the consumers beyond explaining what they themselves offer to consumers. The obvious point being that in a free market if what they are offering in service to car buyers is as good as they claim it to be, the consumers will not go directly to Tesla and other automakers to buy.
Some suggested that while it would affect Tesla, the bigger issue is that it would open the door for Chinese companies to sell directly in the state. To explain why they wouldn’t be able to compete with Chinese automakers, a car dealer owner said and I quote: “China is the only country that supports its industries through subsidies”. The massive 2009 government bailout of the U.S. auto industry was apparently lost on him.
At one point, the dealership owner who was said to have given millions to the local Boys and Girls Club showed up in support of the bill. Ironically and to drive the point made by Dotson about educating consumers over employing sale tactics, the businessman corrected the statement made by the CEO of the Boys and Girls Club highlighting the fact that he didn’t actually give millions of dollars but “helped raise millions of dollars”. For the embellishment of his contribution, which is not in question here, he suggested that the CEO of the organization “would make a great car salesman.”
The meeting was adjourned awaiting amendments to the bill. It’s still not clear if it will pass.
If it passes under its current form, Tesla would be able to sell 1,000 cars per year in the state for the next 2 years and then it would have to stop its operations by 2019.
Update: Dotson’s speech:
“Thank you Mr. Chairman and members of the committee for allowing me to address you today. This is the first time I’ve ever made public remarks in any statehouse, town hall meeting, or anything of the sort. And, honestly, when I accepted my current position at Tesla as the Store Manager for the Keystone location I never imagined I’d be making these remarks.
I had a successful career in a sales role at a major retail location in Indianapolis prior to the opportunity to work in the Tesla store. I made the career decision to change jobs for a number of reasons, not the least of which is the level of innovation and forward thinking by this company. I left a high pressure sales environment to manage a store where education and customer experience are our number one priority. People of all walks of life come into our store, and while every conversation with potential customers is different, there is a common thread to nearly all of them – questions about the technology and passion for the future of electric power. We have children so enamored with the technology that their parents bring them in to the store weekly so that they can see if there’s anything new to look at or watch. Christian comes into our store every Friday evening, his mother drops him off. Where most 12 year olds are home playing video games, Christian spends it in our store. He cares about the technology, he loves the brand. You often see him chatting it up with customers as well as team members of the store. Christian is part of our Tesla family.
Our customers aren’t just car owners – they’re technology and vehicle enthusiasts. We treat each of them as if our business lives and dies based on their satisfaction with the company, because it does.
I tell you all of this to help explain that I didn’t make the career move to Tesla for the title of “Store Manager” or because I just wanted to sell cars – which are perfectly acceptable in their own right. But Tesla offered me a chance to be a part of a company that is always thinking about the future, always thinking about the next way technology can improve our lives, and always providing the highest level of service to our customers.