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Tesla accused of 'misleading' customers by California dealers

Tesla's marketing tactics have come under fire from the California Dealers Association, which claims the electric vehicle startup is misleading potential customers. Do the dealers merely feel threatened by Tesla? 

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Kai Pfaffenbach/Reuters/File
A Tesla Model S car is displayed during a media preview day at the Frankfurt Motor Show last week.

Honestly, Tesla can't catch a break.

First, it had to make a fully electric car that didn't look like a doorstop or a聽.聽No small task, that.

Then, it had to find a few backers, which聽聽in some corners.

础苍诲听then聽it had to jump perhaps the biggest hurdle of all: selling cars to the public聽. (For that, the company brought in no less than the man who created Apple's outrageously successful chain of retail stores.)

聽associations across the country have been suspicious of Tesla from the start. Early on, many dismissed Elon Musk's vision as a pipe dream, but when it became clear that he wouldn't give up, they aimed for his Achilles Heel:聽.

What those associations didn't expect was that the courts would often rule in Tesla's favor. Nor did they expect that the public would often side with Tesla, too, as disgruntled car customers, tech fans, and innovators said, "Let the little guy give it a go!"

A NEW APPROACH

And so,聽, the聽California New Car Dealers Association has changed its tactic. It now says, "Oh, you must've misunderstood. We're聽totally聽cool with Tesla's 'showrooms'. What we have a problem with is Tesla's聽marketing. Elon Musk is trying to pull a fast one on poor consumers!"

In a letter to California's Department of Motor聽听(), the Dealer's Association claims that "Tesla鈥檚 Internet marketing violates multiple sections of Federal Regulation Z, the California Vehicle Code, the California Business and Professions Code, and the California Civil Code." For example:

"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 鈥$580 per month after gas savings聽advertisement found on several of its internal web pages."

The Association goes on to attack other Tesla claims, which reduce monthly payments and the costs of ownership. For example, the Association says that purchase prices on Tesla's website routinely include a $7,500 federal tax credit, despite the fact that the Congressional Budget Office states that only 20 percent of shoppers qualify for the alternative聽聽credit. 聽聽

The Association also criticizes Tesla's math on resale value, commute times (thanks to HOV-lane travel), and cost-savings associated with using electricity instead of gas.聽

OUR TAKE

Factually speaking, the Dealer's Association is correct in its description of Tesla's website. But the site could only be construed as "misleading" if your name is Pollyanna and you zip through it without doing much reading. A quick skim of the "" section makes it clear that Tesla's boasts are just that: boasts.聽

For example, in the "Down Payment & EV Incentives" area, Tesla states:

"In many cases, you鈥檒l recoup the cost of your down payment with electric vehicle incentives. You聽may聽even be eligible for more total incentives than you paid in your down payment. This will reduce your effective monthly cost. Incentives聽depend on the total price of your car and the state that you live in." [emphasis totally ours]

Words and phrases like "In many cases" and "depend on...the state that you live in" tell most people with adult reading skills that there's some uncertainty in Tesla's calculations. You "may" be eligible for these savings, but then again, you "may" not.

That's not to say that Tesla shouldn't play by the rules. It should, just as Ford dealers should, and Buick dealers, and Toyota dealers, and so on.

However, in this case, it seems as if the Dealer's Association聽may be聽grasping at straws. That that聽could be聽because its聽聽realize that Tesla's new business model聽might be聽a bigger threat than they'd ever imagined.

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