Tesla vs The World: Revolutionizing The Car Buying Experience


It’s beginning to look like Tesla Motors’ CEO Elon Musk’s vision of becoming the world’s first mainstream electric car manufacturer is coming to fruition.  “Tesla” has been the top buzz-word in the news covering financial markets for the past few weeks now, and it has not been losing any steam, especially following a 99% rating by Consumer Reports on its Model S.  Tesla stock has already soared by nearly 175% this year.  Due to Tesla’s successes, both investors and consumers are gaining more faith in Tesla and its products.  Along side its stock price, Tesla has also been experiencing increases in sales after winning Motor Trend’s Car of the Year Award, and introducing its own financing program in a partnership with Wells Fargo.

The successes of Telsa Motors is proving to be too much pressure for the conventional car dealership, indicated by a proposed North Carolina bill to ban Tesla Motors galleries in the state.  Unlike car dealerships that make their profits by purchasing their cars at wholesale prices from the manufacturer, and then marking up the prices for the ultimate consumer, Tesla uses a direct-sales method to get their consumers behind the wheel of their machines.  The bill, which has just passed the state Senate, would ban manufacturers from selling their cars without going through a dealer.  Now, if you want to purchase a Tesla car, you can go to their gallery showroom, meet with a representative, choose your configurations, and make the purchase on-site through their website. There are many reasons why these dealers might be pushing for the Governor’s signature on this bill, but I am confident that it has nothing to do with simply playing by the same rules that other dealers are playing by.  Currently, in North Carolina, it is already illegal for an automobile manufacturer to sell their cars without doing so through a dealer, so what would this bill change?  Under current legislation, Tesla still has the criteria of being considered as a car dealership.  The bill would declassify Tesla as a dealer, since it prohibits manufacturers from making sales “using a computer or other communications facilities, hardware, or equipment”.  Tesla is the only manufacturer that uses this as their sole method of selling cars.

Tesla’s products aren’t the only revolutionary aspect of their business.  This buying experience eliminates the need to sit at a dealership for hours, trying to get the price of a car down to a reasonable number, while the salesperson makes multiple runs to the coffee machine, AKA “the manager” during negotiations.  Instead, you go to the showroom, sit in the car, choose your options, and place your order.  Whatever price you pay at the showroom, is the lowest price you’re going to get. No haggling necessary. Is this simply an effort by conventional dealerships to rid Tesla of its competitive advantage, or is it a sign of their hope to have Tesla models in their own lots, and cash in on their growing successes?

Source: http://gma.yahoo.com/teslas-direct-sales-business-model-targteted-n-c-170402561–abc-news-money.html
Image:  http://global.networldalliance.com/new/images/article/tesla_2.jpg



High Speed Internet is Probably None of Google’s Business

There has been a lot of buzz surrounding Google’s new super speedy 1000+Mbps fiber optic internet service that has recently been introduced in Kansas City.  With Google actually delivering what they’ve promised to their customers, people are feeling optimistic about the future of American broadband speeds.  Internet service providers such as Comcast and AT&T are known for charging ridiculously high prices for bandwidth packages.  Consumers are tired of paying $60 per month for 20Mbps download speeds, and only getting 8.  So the question we are all asking is, “Why”?  Why are we paying so much, yet receiving so little?  The main issue is our second-rate infrastructure for truly high speed internet.  Countries such as Japan and South Korea offer services running at 150Mbps for $60 per month while ISPs in the United States are charging $90 to $150 per month for 50Mbps.  The lack of widespread broadband infrastructure in the United States leaves just 59% of Americans connected to broadband, while Iceland’s adoption rate is 83%.  The infrastructure that is most commonly used to deliver broadband (DSL) uses copper phone lines to deliver its data. The issue with using DSL via copper wire is that the internet speed decreases as the length of the connection increases.

The United States is slowly offering more and more fiber optic connections to consumers, but it’s still not nearly enough for the US to be a leader in broadband speeds.  With companies like AT&T and Comcast often giving customers less than what they pay for, Google decided that it was time to step in.  Now, again, we have to ask the question, “Why”?  Why does Google care so much about about Americans getting faster internet speeds, when they are not even in the infrastructure business?  Are they trying to enter this market as a long-term competitor, or are they simply trying to pressure other ISPs into offering their own customers faster internet?  Chances are, the latter.  Here’s why.  The majority of Google’s revenues comes from advertising.  In order for Google to continue increasing their ad revenue, more people need to have access to high speed internet.  The quicker that Google can show you their ads, the more revenue they’re going to earn.  Now, why would Google want to spend billions of dollars on their own fiber optic infrastructure, when they could have AT&T and Comcast spend the money instead?  They probably don’t.  What Google is doing by offering record setting high speed internet to places like Kansas City and eventually Austin, Texas and Provo, Utah, is putting pressure on the other ISPs to give their customers faster broadband speeds at a low price.

Is it possible that Google wants to run Google Fiber as a long-term business?  Sure.  But that doesn’t not mean Google is saying, “It’s our business”.  AT&T, Verizon, and Comcast are in the business of bearing the high cost of infrastructure renovation.  It doesn’t make much sense for Google to want to do the same, starting from ground-zero.