Tesla Plans to Enter China Luxury Car Market Later this Year

Tim Dunne

Tesla is building its first electric car store in Beijing, China, in spite of two major challenges: a very limited charging infrastructure and intense competition in the luxury segment from Audi, BMW and Mercedes-Benz.

The new Tesla “lifestyle store,” which is slated to open later this year, is located in an exclusive . . . Continue Reading Tesla Plans to Enter China Luxury Car Market Later this Year

Mary Ann Keller Says the Franchise System is Here to Stay

Mary Ann Keller speaks about the franchise system at the New York Automotive ForumThe franchise system remains strong and in place in most states despite attempts over the years to dismantle these laws with start-ups of factory-owned stores to change the model, according to Mary Ann Keller, independent automotive consultant and auto business writer and former investment analyst and director on several auto company and dealership boards. Keller presented her thoughts about the franchise system in the U.S. market to auto industry members during the New York Automotive Forum that was co-sponsored by J.D. Power and Associates and the National Automotive Dealership Association (NADA).

Keller’s speech is excerpted:

A Little History about Corporations Trying to Change the Franchise Network

One myth promulgated in the 1990s has now resurfaced. Tesla wants to open factory stores to save money by reducing distribution expenses, which they estimate to be 30% of total expense—that percentage is nonsense.

Remember Ford’s ill-fated Auto Collection experiment? It proved conclusively as told to me by a retired Ford executive last week that corporate guys are not risk takers and they lack the entrepreneurial spirit that is required to manage dealerships.

Big corporations control from the top. Selling cars requires street smarts and adapting to local market conditions and competition. After a couple of years, Ford ended its experiment after its market share losses were too painful and there was mounting evidence that factory stores did not deliver customer satisfaction or reduce costs. Continue reading ›

EV Sales to Rise If More Popular Segment Models Are Added

As with the hybrid market, the increase in the number of battery electric vehicles (BEVs) should help increase demand. The hybrid market grew from two models–the original Honda Insight and the Toyota Prius—in 2000 to more than 25 models in 2010.

In addition to the Chevrolet Volt and Nissan Leaf, there will soon be an electric Ford Focus and niche offerings—such as the Tesla Roadster, Fisker Karma, Mini-E, Toyota RAV4 EV, and the electric smart fortwo. However, the BEV market will remain small if only compact and sub-compact cars are offered. We see the need to add electric utilities (SUVs); crossovers (CUVs); large cars; and electric pickup trucks for the market to really take off. Continue reading ›

Toyota and Tesla to Develop Battery-Powered CUVs

2010 Toyota RAV4

Toyota Motor Corp. and partner Tesla Motors Inc. plan to use the Toyota RAV4 and Lexus RX crossovers (CUVs) as their first jointly developed battery-powered test models, according to a recent statement (July 16) from the largest Japanese automaker. Plans are to begin selling the electric version of the RAV4 in 2012. Toyota will receive two prototypes this month, Tesla said. Toyota also aims to test an electric version of the Corolla, although an unidentified source told Automotive News that the RAV4 and Lexus RX are better suited to the weight of Tesla’s battery pack. Mike Omotoso, senior director of global powertrain forecasting at J.D. Power and Associates, answers questions and provides insight about Toyota and Tesla joint EV plans.

Q: This seems like a smart plan because crossovers are such hot sellers—and the RAV4 is one of the three best-selling compact CUVs in the U.S. market, while the RX Series is the top-volume midsize premium CUV. Do you agree, and are there drawbacks?

A: Crossovers are one of the fastest-growing light-vehicle segments, so it makes sense to develop electric versions of Toyota and Lexus CUVs. The Lexus RX 450h and the Toyota Highlander Hybrid were two of the top 10 best-selling hybrids in the first half of this year, and battery-electric versions of the same vehicles would probably be best-sellers in the future. The fuel economy standards for light trucks are getting more stringent every year, so it will be necessary to develop hybrid, plug-in and electric versions of CUVs and other trucks over the next 5 years to meet future CAFE [corporate average fuel economy] regulations without sacrificing safety and comfort. Continue reading ›