Tesla Vs California Dealerships: Deceptive Price Calculation?
|   Thursday, September 26, 2013
It comes to no surprise that auto dealerships don't really like Tesla and have been fighting each other for the last 4 years. The reason behind this fight is Tesla selling its car directly to buyers, thus bypassing the third-party represented by dealerships.

In fact, the later party is actively working to change state laws so that Tesla will be forced to do business the old fashioned way. In California however that is a perfectly legal action, so the dealers have thought about another way to take down Tesla.


Right now, the company is being accused of deceptive marketing and pricing practices by the California New Car Dealers Association.
According to the Association, Tesla fails to respect several sections of Federal Regulation Z, as well as the California Vehicle Code, California Business and Professions Code, plus the California Civil Code.

In a letter sent to the California Department of Motor Vehicles, they say that: "Tesla fails to provide required information and shatters the notion of comparison finance shopping by including the potential availability of incentives, gas savings, and tax savings into final payment quotes for prospective customers. This scheme is most blatantly demonstrated by the general ―$580 per month after gas savings advertisement found on several of its internal web pages."

Moreover, the complaint addresses the issue of how Tesla calculates the reduction of monthly payment as well as the true cost of owning a car. Moving on, they also have a problem with how the car resale value is calculated, commute times, and overall savings made by dropping gas in favor of electricity.

Now comes the interesting part. The California New Car Dealers Association is right is almost all its claims. When the calculator was first released back in April, everyone who knew something about cars and math, jumped 10 feet in the air and screamed: "The numbers are wrong!"

Eventually, as a response to those cries, Tesla did some modifications to its residual-value assumptions within the calculator, giving more accurate results, but there is still a lot of room for improvement.

Furthermore, there is also the issue of the Federal tax cut of 7500 dollars. if you are to go through Tesla's site you might think that anyone is eligible and the incentive is immediate. In truth, not everyone qualifies for it and there are some strings attached to it, but the situation is not so grim as the Association makes it out to be. Seeing that those buying Teslas already have an above average financial situation, surely more than 20 percent of all buyers qualify for the incentive.

Now, it is certainly clear that Tesla has some issues to sort out, but the Association itself is not without a hidden agenda. Because Tesla's practices have been identified in Chevrolet, Nissan and others, yet they are not attacked at all on this issue. Could they be safe from this because they use dealerships to sell their cars and Tesla doesn't? That is a question that has an uncomfortable answer for the dealerships.
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