Tesla to have presence in Omaha, KC; may face legal hurdles in Nebraska
Tesla service centers and potentially even stores are coming to Omaha and Kansas City. The questions remains "when" and "where?" The all-electric car manufacturer's website placed a "coming soon" label on the two cities in recent weeks, but a spokesperson for the Elon Musk-led company said she can’t speak to a timeline. Like all Tesla
Tesla service centers and potentially even stores are coming to Omaha and Kansas City. The questions remain “when” and “where.”
The all-electric car manufacturer’s website placed a “coming soon” label on the two cities in recent weeks, but a spokesperson for the Elon Musk-led company said she can’t speak to a timeline.
Like all Tesla locations, the service centers in Omaha and KC will be Tesla owned and operated. Sales showrooms also may be in the works, but those plans are still in flux.
Alexis Georgeson, Tesla’s spokesperson, said Tesla opens sales and service centers in areas where there is a high density of its Model S vehicles and where it believes there will continue to be a strong market.
Tesla sold 22,500 vehicles in 2013 and is expected to sell around 35,000 this year, according to reports. Bill Moore, an electric vehicle blogger in Omaha, said he’s heard through word of mouth from owners that there are 40-50 Tesla vehicles in Nebraska.
But Tesla’s stores aren’t your typical car dealership.
It skips the idea of the dealership all together, instead opting for small sales rooms, which are usually stark white, modern storefronts in malls. Buyers complete the sale online through its headquarters in California. The stores help educate and engage people on the Model S and Tesla’s technology, Georgeson said.
Locations feature touchscreen design studios where visitors can customize a Model S vehicle. A display Model S is also available for visitors to slide into the driver’s seat and there are test drive vehicles, too.
The stores also serve as a place where owners can pick up the Model S they ordered.
Tesla wouldn’t say where Omaha and Kansas City’s locations would be or release any more information since the plans are still in the early stages.
Controversial sales model different in Missouri, Nebraska
Tesla, like other in-the-news entrepreneurial ventures—Lyft, Airbnb, Square and others—operates outside the industry norms and sets to disrupt the way its entire industry works.
Its direct sales model has been controversial, making waves in state legislatures, including bans of the stores in Arizona, Maryland, New Jersey, Texas and Virginia. Other states have put restrictions on how many Tesla stores can operate in the state.
Last month, Missouri’s legislature temporarily shelved a bill that would have banned Tesla’s direct sales store in St. Louis.
The fight pitted Tesla against the Missouri Auto Dealers Association, which said dealer franchises protect consumers by providing customer service and handling problems like recalls, the St. Louis Dispatch reported.
Because the Missouri legislation never gained traction, a Kansas City store seems to be in the clear.
Not so in Nebraska. A state law on the books since 2000 bans direct sales from the manufacturer.
It’s unclear if Nebraska’s legislature will do anything about the issue. Two state senators reached this week hadn’t heard about the planned Tesla service center or potential store in Omaha and neither has heard any discussion among senators about the issue.
Loy Todd, president and general counsel for the Nebraska New Car & Truck Dealers Association, said Nebraska’s law is patterned after Texas‘ stringent laws that only allows car sales through dealerships.
Despite the laws, Tesla still manages to operate stores in Houston and Austin, selling hundreds of cars to Texans, but there are limitations on how the stores and service centers are allowed to operate, Tesla’s website states.
Store employees can’t tell visitors how much a Model S costs, give test drives or discuss financing, leasing or purchasing options. Customers must order online and then cars are shipped to Texas via a third-party transport company. Tesla employees cannot accompany the vehicle or provide information or guidance on operations until 48 hours after the customer takes delivery.
If Tesla did open a Nebraska store, it would likely have to operate under similar limitations or seek to change the law.
Nebraska’s law was implemented last decade when some car manufacturers were looking at direct sales to compete with dealers, Todd said.
“That would be pretty unfair for a franchise dealer to have to compete with the supplier of the motor vehicles, so we outlawed that,” Todd (right) said. “The manufacturers at the time weren’t shy about indicating they only wanted to have one or two dealerships in the state, so all the smaller towns and cities would be at risk of losing their dealerships. The manufacturers would also have gotten to control prices and those of their competitors since they would be the only source of the product.
“When there is only one source and the manufacturer can set price to public and their competitors, there is a flaw in the system.”
Todd said consumers also should be entitled to warranty and regular service by dealerships and pointed to numerous car companies that went out of business, but dealers were still around to take care of customers.
The dealers also invest millions in their local economies, Todd said.
“It sounds like Tesla can’t legally do what they want to do in Nebraska,” Todd said. “They can sell through a franchise dealer and we welcome them to do that. We’d love to have them here. Lots of dealers would love to compete with each other.”
As to whether he thinks anything will come up in the legislature, Todd said he wasn’t sure.
“Anybody who wants to pursue legislation can do that,” he said.
He did say that for one thing, people who can afford a $70,000 to $130,000 Tesla are people who can probably afford to take a risk if the company fails.
Matt Watson, founder of KC startup Stackify and a Tesla owner, is one of those people.
He understands the Nebraska law and similar ones are in place to protect existing dealers, but said it shouldn’t apply to Tesla because Tesla has never had any dealerships. He’s not worried about Tesla going under either.
“Protect the Ford dealers from Ford [selling directly], but Tesla never has so no one needs [protection],” he said. “I have no fear of [Tesla] disappearing or going out of business, because their product is so good. No one else has figured electric cars out yet. Tesla created something people want.”
But it’s a slippery slope, Todd says.
“What happens if a company with vehicles at a much lower price point goes broke?” Todd asked. “Where is the government to protect us from that? [These laws] are there for public trust.”
Tesla owner would welcome service center, shop in KC
Stackify founder Matt Watson pulls up the Stackify website on the dashboard of a Tesla he bought in 2013.
Watson is a car guy.
So when he saw a couple Teslas around Kansas City in 2013, he was interested.
While traveling in Portland, Ore., he checked out one of Tesla’s mall stores and liked the car so much he bought it without taking a test drive.
He ordered the nearly $100,000 car on his phone and put a deposit down via PayPal. The rest was done online and via email, until he got a call to have it dropped off to him at his home.
It’s not your average car buying experience, but Watson isn’t your average car buyer.
It was his sixth car.
But he does favor the idea of a showroom and service center in KC, he said.
For the few minor service issues he has had, Tesla sent someone out to his home to take care of it.
“But a service center would be great here,” he told SPN. “There’s probably demand. I have at least two or three Teslas just in my neighborhood and there’s probably way more around town. Maybe not as a many as when I was in California though—they’re everywhere.”
Moore, the electric vehicle blogger in Nebraska, said Tesla stores also would be a welcome sight in Omaha.
“I would think you would see more sales to a degree,” he said. “Will it be comparable to the degree of sales at H&H Chevrolet, hell no, but Tesla is thinking long term when they roll out the next model that is priced lower. That’s when those showrooms will matter to the average person.”
He said most people who want a Tesla have the money and ability to get them from other states already. But he hopes a service center or store could mean a Supercharger network—Tesla-run pit stops to charge the all-electric vehicles—along Interstate 80.
The cross-country Supercharger network neglected Nebraska, going north to South Dakota instead.
We’ll share event highlights, founder profiles and feature stories digging into all things related to Nebraska startups and small businesses. Delivered on Wednesdays.