Chapter 7 - Closing Case - Direct Electric Vehicle (EV) Sale via E-Commerce Flashcards
What has Amazon taught about e-commerce?
Many of the sales channels that people were accustomed too were unnecessary. A company could remove the middle man (store) and customers would still make educated purchases. Customers that were geographically far from the company could still be reached at low costs and high profits.
Who were the first companies to offer a similar system to Amazon?
Sears and Roebuck who had mail in catalogues that would allow customers to place orders and get thousands of products within a few weeks.
Why do EV sellers want to sell directly to the consumer? What has hindered this advancement?
Reduce the costs by $2000 per vehicle. Opposition from the middle man, the dealership.
What dopes Caravan and Vroom enable customers to do?
Customers to order used vehicles online and have them shipped directly to their address.
Why can auto manufacturers not fully utilize e-commerce?
State laws require that manufacturers sell to the dealerships, which then sell to the customer. However most EV companies want to fully embrace e-commerce and by pass the middle man.
Who were the three dominant manufacturers of vehicles? What were these company’s able to do with their power (Dealerships)?
Ford, Chrysler, and General Motors. Impose unfair conditions. They allowed independent dealers to carry their vehicles, but they also had corporate owned dealerships, letting them sell to the customers. They could beat the price making more money than the independent dealer.
What did the State do to protect the dealerships? How does this impact the customers today?
Making it illegal for the manufacturer to sell directly to the consumer, as it was unfair for the dealership. They could not benefit from the lower prices. You cannot buy a car and customize it online having it shipped to your house, the manufacturer is legally required to have it done through a dealership.
How did dealerships act as a monopoly?
If you wanted a specific brand car, you would go to that specific dealer. They played influential roles in their community creating sponsorships and donating to local and state politicians. They tried to manipulate the local laws to let them continue the monopoly, but ultimately the independent dealers won.
What do people who oppose the bill in Georgia say about allowing EV manufacturers (Rivian) to sell directly to the consumer? What is the value of the plant in Georgia for Rivian?
What do advocates say about this situation? Can they purchase electric vehicles directly today?
The economic benefit that is generated in the state of the sale would not be in that state, but rather in a different state. Direct sales would mean many dealerships closing and a loss of Job for hard working Georgians. 5 billion
Consumer choice and the free market should take priority over the dealerships and state tax dollars. Georgia consumer still cannot buy directly from their local dealership.
What happened in New York State in 2022 regarding the EV direct consumer sales?
United Service Workers Union (USWU) and United Auto Workers (UAW) urged law makers to reject a proposal to allow direct EV sales. It would undercut traditional business models that benefit manufacturers, dealers, and the workers.
When does the direct sale law not apply? Who is the most negatively affected when they sell directly to the consumer and why?
Depends on the state, but if they have a physical presence in the state. The consumer is the most negatively affected as the customer will have to drive and pick up the vehicle, or pay shipping from a state that permits the sale.
How does Rivian sell most of its vehicles?
Online from five company owned stores that serve as showrooms and warranty service locations. Online transactions are processed in Illinois, the site of the first factory, and ships the vehicle directly to the consumer.
How does Tesla sell the majority of its vehicles in the States?
Directly to the consumer through the website or the network of showrooms. The purchase is direct with the manufacturer but the experience can include a local facility.
What have consumers been doing with respect to EV sales even though state laws prohibit it? How do people feel about buying vehicles they have never seen or driven?
Voting with their wallets despite the additional cost of having to pick it up or have it shipped. In 2020, 80% of EV sales were done through online direct sales. Some feel at ease whereas others feel like they would prefer to see it first hand and make a drive around before making such an important decision.
What are the Canada laws about selling new cars to the consumer? What are clutch and Cardoor?
There are no laws that prohibit selling new cars directly. However, automakers do not sell directly to the consumer, they only sell through the dealership.
Two Canadian start up companies that send new and used cars online. They are independent from car manufacturers but they partner with specific dealerships in order to see new cars directly to the consumer.
