Now With Fuel Economy Standard.
It Stops Good Fuel Economy Being an Option
(Editor’s Note: This is the third in a series about vehicles with start-stop technology. See the others here and here; the background on start-stop systems is here)
Chevrolet launched an all-new Malibu for the 2013 model year, but it was less successful at winning sales than Chevy had hoped. In an attempt to increase its appeal, a revised 2014 Malibu has a new look outside and in, including a freshened front-end and, inside, a redesigned center console and a roomier rear seat.
But the changes go beyond cosmetic.
Malibu peeked into the parts bin of its bigger brother, the 2014 Impala, and picked up suspension enhancements that Chevy says improves Malibu’s overall driving refinement. To satisfy enthusiast drivers, engineers
Borrowing Makes It Better
tweaked Malibu’s optional 2.0-liter turbo four resulting in a 14-percent increase in torque – 295 pounds-feet, up from 260.
Also, several new safety features are available for 2014, including Side Blind Zone and Rear Cross Traffic alerts.
But wait, there’s more.
In a somewhat surprising move, the entry-level Malibu LS now comes standard with a start-stop system, the first midsize sedan sold in the United States that is so equipped. Combined with refinements of its base 2.5-liter four-cylinder engine and a new six-speed automatic transmission, the LS has a significant fuel economy increase compared with the outgoing model (now 25 city; 36 highway).
The fuel-saving and emissions- reducing feature has become commonplace in Europe, where it’s estimated that 40 to 45 percent of vehicles use the technology to meet European emission regulations (a number destined to grow to 100 percent).
Start-stop has been slow to catch on with U.S. automakers in part because of cost. For example, it is a $295 option on the Malibu’s competition – the 2014 Ford Fusion.
Another reason is that the driving cycles established by the Environmental Protection Agency, which help determine mileage ratings for cars and trucks, don’t have an appropriate test to gauge a start-stop system’s effectiveness on mileage ratings.
When asked why Chevy included start-stop on the Malibu LS, Chad Lyons, Chevrolet communications manager said, “Customers are sensitive to fuel economy and we think it just makes sense.” In other words, whether it shows up on the mileage on the window label, Malibu buyers will get better fuel economy in the real world.
And the 2014 Malibu with start-stop will help General Motors to meet more stringent Corporate Average Fuel Economy (CAFE) standards are set for 2016.
Malibu Stop-Start System
The Malibu’s start-stop falls under the category of a “light stop-start system.” Like other systems, the Malibu’s start-stop operates automatically and doesn’t require any input from the driver. It helps conserve fuel by shutting off the engine when the car comes to a stop, such as at stoplights. The engine automatically restarts when the driver takes his or her foot off the brake.
Todd Pawlik, Malibu chief engineer, stated that leveraging knowledge from the system used in eAssist (Buick LaCrosse and Regal) was key to improving city fuel ratings by 3 mpg, or five percent.
Inside Gets An Upgrade Too
The system consists mainly of a beefed-up starter and a small auxiliary battery located behind the right rear wheel.
When the Malibu comes to a stop, an auxiliary electric transmission fluid pump maintains pressure in preparation for the “auto start” launch.
Ensuring quick, smooth start-ups from stop, the reinforced starter motor has a tandem solenoid. It supports change of mind operation by allowing the pinion placement and starter rotation to be controlled independently.
Employing absorbed glass mat (AGM) technology, the auxiliary battery’s purpose is to supply power to the vehicle’s electrical systems (not including the starter motor) for the brief moments when the engine is being re-started.
The start-stop system monitors – among other things – vehicle speed, climate control system operation and the force a driver applies to the brake pedal, to determine whether it is efficient to shut off the engine in certain driving conditions. For example, if a driver is creeping along at speeds less than 6 mph, with frequent brief braking as in stop-and-go traffic situations, the engine does not shut down so as to not inconvenience the driver.
Most vehicles with start-stop have a shut-off switch allowing drivers to simply turn it off if they’re not happy with it. The Malibu does not have an optional kill switch.
Under The Hood
Start-stop isn’t the only 2014 Malibu fuel-saving enabler. The car receives an improved Ecotec 2.5-liter four-cylinder engine that also is used in the recently launched 2014 Impala.
The 2.5 continues with direct injection and variable valve timing, but for 2014 engineers incorporated a new valvetrain technology known as Intake Valve Lift Control. It saves fuel via a “low lift” mode. Under light loads, the intake valves open just enough for the engine to pump only the air it needs to meet the driver’s demand, eliminating what are called pumping losses.
The system switches to high-lift mode at higher speeds or under heavy loads, providing the full output capability of the engine.
A new six-speed automatic transmission makes its debut in the 2014 Malibu 2.5 SL. It includes improvements that reduce the energy required to pump transmission fluid, also boosting fuel economy.
The new engine is SAE-certified at 196 horsepower and 186 pounds-feet of torque, both down slightly from the outgoing 2013 Malibu. But fuel economy has improved to an EPA estimate of 25 city/36 highway — a 14 percent improvement in city mileage and six percent greater highway efficiency.
Changes to the 2014 Malibu’s exterior were limited to the front end, which were influenced by the full-size 2014 Impala. The new look features an emphasized lower grille with the hood extending down and over the leading edge of a narrower upper grille. The grille openings – with black grille texture – are wider and accented with chrome, which adds style that was lacking in the previous car.
A New Look Right At You
Out back, the Malibu continues with two pairs of squared-off, Camaro-like taillights. The top-end LTZ trim sports dual stainless-steel exhaust tips.
The cabin has an open, airy feeling with quality looking soft-touch materials in all of the right places. The dash design is Chevrolet’s trademark cockpit style that features two large instrument clusters with easy-to-read white on black gauges.
A redesigned center console has a more user-friendly extended armrest along with a pair of cup holders and a very thoughtful feature – a dedicated stow area for two cell phones.
The interior’s key upgrade is redesigned rear seats that provide an additional 1.25 inches of knee room and greater seating comfort. Front seatbacks were reshaped to gain the legroom, while new cushion sculpturing and revised cushion material allow passengers to sit deeper in the rear seats.
Standard features on the 2014 Malibu LS include remote keyless entry, power locks, windows and outside mirrors, cruise control, air conditioning, tilt/telescoping steering wheel, a six-speaker audio system with AM/FM/CD/satellite radio and Bluetooth phone connectivity.
On the safety front, all 2014 Malibus have 10 airbags including front and rear airbags and dual rear side-mounted airbags. To assist drivers in avoiding accidents, four-channel anti-lock disc brakes, stability and traction control, brake force distribution, and corner brake control are standard.
Pricing is, as you might expect, slightly higher for the 2014 Malibu LS compared to the 2013 model. The sticker price begins at $23,235 including an $895 destination charge, a $595 increase overall.
Moving up, the Malibu 1LT is priced at $24,505, the 2LT is at $26,210, the 3LT with the 2-liter turbocharged engine is $27,745 and the top LTZ trim starts at $28.685.
The former Eco model is essentially surplanted since all of the 2.5-liter equipped Malibus get max a battery boost. Fuel economy is 25/36/29 combined for the 2.5-liter and 21/30/24 combined for the turbo 2-liter.
Photos by the manufacturer
Posted on March 30, 2014
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Road Test: 2014 Chevy Impala
Overview: 2014 Ford Fusion With Start-Stop
Even Porsche Downsizes Its Engines
Smaller Is Better For Automakers – And Consumers Shouldn’t Notice Any Difference.
The global drive to reduce greenhouse gases and increase vehicle fuel efficiency is pushing automakers to reduce the size of their engines – while trying to keep all of attributes consumers expect from their cars. Engineers have pushed the limits of technology to produce engines that are more efficient, meet increasingly stringent pollution standard and yet make better horsepower and torque than previous generations.
Recently, three auto companies announced new engine families that epitomize this new trend:
- General Motors’ new engine family
- Porsche’s new four-cylinder engines
- VW’s new diesel engine
Let’s look at each of these to see how they plan to ease consumers into this new generation of engines.
General Motors’ New Fours
After successfully going through bankruptcy, GM is now starting to put money back into development of its hardware, with a focus on engines that can serve its models around the world. That world-emphasis means fuel efficiency is at the forefront.
The new family of small engines GM just announced will eventually include 11 powerplants that will range from a 1-liter turbo three-cylinder up to a 1.5-liter turbo four. All will have aluminum blocks and heads, which
GM Gets Small With Its Engines
should result in lighter weight to enhance any efficiency gains from the engines themselves. In addition, they have double overhead cams with four valves per cylinder, variable valve timing, water-cooled exhaust manifolds, variable oil pumps to save energy and piston cooling jets.
Some engines may also feature direction fuel injection and turbocharging, depending on the market.
GM said variants of the modular engines would be able to be produced on the same assembly line in five plants around the world. Eventual volume could reach 2.5 million units, GM added. The first engine, the Ecotec 1-liter turbo three-cylinder, will be sold in Europe, but no U.S. appearance for it has been announced, but several of the engines are likely to show up in GM’s small cars and applications such as the Chevy Volt and Cadillac ELR range-extended electric cars, which currently use a 1.4-liter non-turbo engine as a generator.
The engines are designed to put GM a leg up on Ford’s EcoBoost engines with quieter operation and as good or better efficiency and power.
Porsche Goes Back To Four
Porsche has more of a challenge. This subsidiary of the Volkswagen Group doesn’t make very many cars and specializes in sports cars (even though its current best-seller is an SUV) and has an image that is key to its sales success.
Porsche Bets On a Powerful Four
Even though the company’s heritage is in small displacement engines, in the more recent past that image and sales were tarnished with some four-cylinder models concocted in partnership with VW. the 1969-76 914 was ridiculed as a VW-Porsche and was finally dropped when Porsche returned to a focus on its higher-end sports cars.
Like the engine offered in the 914 – and Porsche’s larger six-cylinder engines – the new engines will be horizontally-opposed or “flat fours” and will be produced on the same assembly lines. Compared to the offerings of the 70s they will bring considerably more technology and may produce almost 400 horsepower in some versions. The current 2.7/3.4-liter six-cylinder engines in the Boxster and Cayman production from 265 to 340 horsepower.
They should aid the Boxster and Cayman models in which they’ll be available by reducing weight and thus boosting handling and braking.
“We will continue with the downsizing strategy and develop a new four-cylinder boxer engine, which will see service in the next-generation Boxster and Cayman,” said Porsche CEO Matthias Muller, in an interview with Germany’s Auto Motor und Sport magazine. “We will not separate ourselves from efforts to reduce CO2,” he added.
Of course reduced CO2 translates into better fuel economy which, while not a major focus of Porsche buyers, is a concern for the corporation that produces them.
Diesel Also Moves Forward
Volkswagen’s build a good reputation with its small, turbocharged direct-injected gasoline and diesel engines, but its engineers are not resting on their laurels. This year VW will introduce a new four-cylinder diesel it has dubbed the EA288 in its VW and Audi models.
The engine does what diesel engines have been doing in each of several generations since being introduced almost two decades ago – increasing horsepower and torque while decreasing fuel consumption and emissions. Our experience with VW and Audi TDI models has been excellent.
Diesel Marches On
The engine will show up first in the new Golf due this year. Although it has the same displacement as the engine it replaces at 2.0-liters, the engine is all new, an Audi spokesperson told Clean Fleet Report. While keeping pace with new emissions restrictions, the diesel also is expected to push various models’ fuel economy ratings beyond their current range of 41-43 mpg. In addition, VW engineers said the new engine would be a worldwide model, ending the current practice of using different engines in Europe and the U.S.
As was seen in GM’s new engine line, the VW diesel added detailed features to increase efficiency, including reduced in-cylinder friction, an oil pump with controlled internal airflow, a variable water pump, a new thermal management system and a roller cam. It also has an intercooler integrated into the intake manifold and adds urea exhaust aftertreatment.
VW also announced that the EA288 will be B20 (20 percent biodiesel/80 percent ultra-low sulfur diesel) compatible. After appearing in the Golf TDI, the engine will be found in other VW and Audi products, including the Jetta, Sportwagen, Passat, Beetle and Audi A3, among others.
Words and Photos By Michael Coates; Some Photos By the Manufacturers
Posted March 29, 2014
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The Hybrid Sales Leader Continues Its Market Dominance By Plugging In Its Icon.
Toyota – expanding the leading brand with a plug
In the world of automotive sales, earning the ranking of top-selling model in any category is a considerable achievement. In an internal combustion engine world, when the Toyota Prius became the best-selling vehicle line in the State of California in 2012 and then backed it up with a repeat in 2013, it was huge for a hybrid to take the prize. The Prius had a strong national presence in 2013 where it was No. 16 in sales for all cars and trucks and No. 10 among cars. To round-out the sales story, Toyota has sold 1.5 million Prius models in the last ten years, easily making it the best selling hybrid car in the United States.
The Prius four-door hatchback first went on sale in the United States in 2000 and the smaller Prius c and larger Prius V came along in 2011. They were joined by the plug-in version in 2012.
Clean Fleet Report had the opportunity to drive, in back-to-back weeks, the 2014 Prius Hatchback and the 2014 Prius Plug-in Hatchback. Here is a look at the two, where the similarities are many and the differences few.
The front-wheel-drive 2014 Prius is powered by a parallel hybrid drivetrain, which Toyota calls their Hybrid Synergy Drive. In the parallel hybrid system the electric motor can power the car by itself, the gas engine can power the car by itself or they can power the car together.
Plug-in Prius gets you to new places
The Hybrid Synergy Drive system comprises a 1.8L DOHC, four-cylinder gasoline engine with an electric motor producing a combined 178 horsepower (hp). It adds a 26 hp/60 kW nickel-metal-hydride (Ni-MH) battery and through the electronically controlled Continuously Variable Transmission (ECVT) delivers 51 city/48 highway for a combined 50 mpg.
The Prius Plug-in is powered by the same gasoline engine and electric motor but adds a 80 hp/60 kW lithium-ion (Li-ion) battery pack that can power the car solely on electricity for about 11 miles. The Prius Plug-in fuel economy is a bit different with 51 city/49 highway but the same 50 mpg combined, but the Plug-in also delivers a 95 mpge when run in EV mode. As with all plug-in hybrids, the driving style and charging regimen will determine actually mileage in the real world.
The Prius Plug-in Li-ion battery is charged by plugging in or through the regenerative charging system, which converts kinetic energy into electric energy and stores it in the battery when applying the brakes or coasting. There is a standard drive mode “D” or the “B” mode, which recharges the battery at a faster rate when coasting downhill.
In addition to the regenerative charging, the primary method to replenish the batteries is by plugging in. Here’s how much time it will take:
120V 3 hours: discharged to a full charge
240V 1.5 hours: discharged to a full charge
The Prius Plug-in does not come with a 480V Quick Charge option.
Driving Experience: On the Road
The four-door Prius Hatchback 2014 weighs in at 3,042 lbs, with the weight well distributed due to the under-seat battery placement, resulting in a low center of gravity. The electrically power-assisted rack-and-pinion steering, the front MacPherson struts with stabilizer bar and rear Torsion beam suspension delivers a smooth, although not necessarily quiet, highway ride. The Prius with the 15-inch alloy wheels (17-inch ones are an upgrade) corners so-so with little body roll, but with no sense of feeling sporty. Acceleration 0 – 60 is listed by Toyota at 10 seconds, but that may be the minimum time it takes. No head snapping going on with the Prius,
The Prius models plug along
but off-the-line drag racing is not why a million and a half of these have been sold. So, expecting a performance level that Toyota never promised is unfair. But let’s get real on what is fair, fuel economy!
The Prius Plug-in (which weighs in at 3,165 lbs.) offers up-to 11 miles on pure electricity if you go no faster than 30 mph. Other than that, there is little difference in the two models. Once up to freeway speeds, both Prius models shine, delivering 50+ mpg. And if you are into hypermiling, the practice of energy-efficient driving aimed at improving fuel economy beyond the EPA ratings, you may want to see how far you can squeeze that gallon of gasoline or kilowatt of electricity. You don’t need to own a hybrid or EV to practice hypermiling, but it seems this is a hot topic among Prius owners trying to out-distance each other.
Toyota has mastered combining the regeneration system with the four-wheel disc brakes with ABS. Both Prius models stop straight and true with no brake fade.
Driving Experience: Interior
The 2014 Prius has a spacious interior with a twin cockpit design with a “floating” center stack separating the bucket seats. I say “floating” because where most cars have solid sides to their center stack, on the Prius this area is an open tray. Once I got accustomed to fishing around for my stashed items, it was quite handy. The tilt/telescopic steering wheel has all the usual control buttons (audio, phone, cruise control, climate, Bluetooth,
Just quirky enough
etc.) including the ability to switch between fuel and battery (hybrid) gauges. Another unique design feature is that the gauges are off to the right a few degrees. Toyota makes-up for this by having a heads-up display (standard on the Four Model–Prius Liftbacks come in Two, Three, Four and Five trim levels) that appears on the windshield directly in-front of the driver. All-in-all it’s a workable system after a short learning curve.
The Prius comfortably seats four full-size adults (five in a pinch), but the front bucket seats could use more thigh bolstering. There is plenty of storage space with or without the 60/40 rear seats folded flat. The car has good sightlines once you get over the spoiler cutting horizontally midway through the rear window. One oddity is that a beeper goes off inside the cabin when shifting into reverse. Odd because as the driver you know you put the car in reverse, the Rearview Camera pops-up on the screen and the beeping is not heard outside of the car where it would be the most useful.
The 2014 Prius is well equipped for safety with remote keyless entry, power door locks, TPMS (Tire Pressure Monitoring System), projector beam halogen headlights, seven airbags, adaptive cruise control, vehicle stability and traction control and the optional intelligent parking assist and lane departure warning.
Driving Experience: Exterior
The Prius is one of the most recognizable vehicles on the road. Its wedge-shape has not changed much since redesigned in 2004 and, either you like it or you don’t. The shape is driven completely to reduce wind resistance and drag to increase fuel economy (both Prius models have an excellent .25 coefficient of drag). Rumor has it a new Prius design is a couple of years away, but it would hard to believe that Toyota would venture very far from the general overall shape of the current car.
The 2014 Prius base price is $25,010, including the $810 destination charge. The nicely optioned Prius Four I was driving is priced at $33,290 including the $810 destination charge. The Prius Plug-in, which starts at
Ready to swallow
$29,990 including the destination charge, qualifies for Federal and State tax credits that could reduce your final cost. Clean Fleet Report recommends contacting your CPA before considering a Prius Plug-in purchase so you are completely clear on the tax credits. Not relying on the dealer to provide this information will serve them and you best.
Also worth noting is that in California the Prius Plug-in qualifies for the coveted car pool stickers allowing the driver, with no passenger, to use the HOV lane. This is no small thing when trying to get anywhere on a freeway in the Golden State, but those stickers may only be available for a few months as the demand for them has been strong.
The 2014 Prius comes with these warranties:
- 3-year/36,000 Comprehensive
- 5-year/60,000 Powertrain
- 5-year/Unlimited-mileage Corrosion
- 8-year/100,000-mile Hybrid-related Component Coverage
- 15-year/150,000-mile Hybrid-related Component Coverage (applicable states are: CA, MA, NY, NJ, VT, CT, ME, NM and RI) with the exception of the hybrid battery. The hybrid battery is warraned for 10 years/150,000 miles
Observations: 2014 Toyota Prius Hatchback and Prius Plug-in Hatchback
Whether tooling around in-town or venturing out on the open road, if you value paying as little as possible for each mile driven, then the Toyota Prius should be on your shopping list. Not many cars get the outstanding fuel economy of the Prius family.
You will pay more for a hybrid versus a gasoline-powered car and you will need to calculate if the additional cost makes sense for your driving patterns. But, if you are putting a lot of miles on your car or like the ability to cruise around town in pure electric mode like the plug-in version offers, then the additional initial expense may be worth it to you.
You will also pay additional for the Prius Plug-in, with a base price of $29,900 versus the base Prius Hybrid at $24,200. Both prices do not include the $810 Destination Charge. So as you can see, a $5,700 premium for
Still leading the hybrid way
the plug-in will be a consideration at purchase time for what amounts to the ability to drive approximately eleven miles on pure electric charge and if you live in California, apply for the stickers that allow a single driver to use the car pool lanes. Hence, the conundrum.
Clean Fleet Report cannot recommend one model over the other as your lifestyle and daily driving needs are the determining factors. But, the Prius reliability and its being the market-leading hybrid should give you confidence that this car will be in your garage for many, many years.
Whatever you end up buying, enjoy your new car and as always, Happy Driving!
Words and Photos by John Faulkner
Posted on March 23, 2014
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Lone Star State Renegade
Tesla vs. TADA.
Tesla Motors, seller of the much desired Tesla Model S, is no foreigner to the realm of legislative battles. Within more than a few states, including New York and North Carolina, Tesla has managed to win lawsuits and prevent blockage of their non-dealership sales technique, resulting in more of the electric luxury cars on the road than ever.
Unfortunately, Tesla seems to have hit a wall in Texas. Mainly due to the efforts of the Texas Auto Dealers Associate (TADA), who insisted Tesla’s sales would hurt family-owned dealerships in Texas, Tesla was unable to gain exemption from the laws that prevent in-state sales through non-franchised dealers. As a result, Tesla has been forced to partake in some frustrating, and some downright silly, sales techniques in order to serve the nearly thousand or so Texan Tesla Model S owners without breaking franchise laws.
For example, the “galleries” Tesla operates within Texas are absolutely forbidden from allowing interested parties to test drive a car. Tesla employees also can’t name actual prices or refer customers to out-of-state stores. The most they can do is direct customers to Tesla’s website and state that the Tesla Model S is “around the same price as other luxury cars.” Even if a buyer is initially happy to overlook the limited information Tesla can provide (and many people aren’t), their complications won’t end after the purchase of the car. The car must be handled as an out-of-state transaction, and even Tesla service centers located in Texas are forbidden from displaying the Tesla logo or advertising publicly that they will work on Tesla cars. The Model S cars that are dropped off at buyers’ homes arrive in an unmarked truck without instruction (and remember, no one has test driven them), and without any final touch-ups to rid the car of road grime or similar faults. Since the transaction is technically an out-of-state purchase, the sale also results in higher interest rates than non-Texas buyers, disqualification from the buyback program, and the arrival of an uninspected car with no plates and the sales tax unpaid.
So why did Tesla fail in Texas? Elon Musk, Tesla CEO, has recently guided two bills through the Texas legislature in order to build a rocket launching facility in southeastern Texas to support his SpaceX program with little opposition, yet his $345,000 payment to lobbyists failed to push the House or the Senate to hold chamber-wide votes on legislation to repeal the restrictions on Tesla Motors. The resistance was largely due to the $780,000, more than double what Tesla paid, given by TADA and other car dealers. TADA also wisely focused their money on 26 lobby contracts, while Tesla avoided direct political contributions. According to the TFPJ (Texans for Public Justice) report last month, if Tesla plans on succeeding in 2015, Musk will have to send his money flow into the political spectrum.
What franchised Texas car dealerships fear is the direct-to-consumer sales technique that Elon Musk brings to the table. Much like Apple — whom he has repeatedly pointed out as his sales inspiration — Musk has chosen
Tesla struggles with Texas legal hurdles
to forgo the hard sell, commission driven sales techniques of ordinary dealerships, opting instead for uniform prices and what he calls a more “educational approach.” As he told ABC News in August, “We actually train people to educate. We always wanted to be a really low-key kind of friendly environment, where we’re not constantly trying to close deals.” It’s impossible to ignore this direct opposition against the stereotyped middleman dealership sellers, whom Musk believes are prejudiced against electric cars, and unliked by most customers.
Musk also told the Texas Tribune that “Texas is a free-enterprise state that prides itself on being the freest in the nation — I think that’s a good thing.” When even electricity providers in Texas are subject to competition, it’s hard to disagree with Musk’s statement that “The laws that are in place to protect the big established auto dealer groups are very un-Texas.” Musk knows that the dealers are powerful allies in local political campaigns, but remains hopeful that having the public favor will lead to his eventual success, since he believes that if the legislatures continue to vote against what Musk believes is the majority’s desire, it is a perversion of justice.
Bill Wolters, the president of the Texas Automobile Dealers Association responded to Musk’s accusations by saying, “This happens all the time. Someone wants an exception to the franchise laws. If we made an exception for everybody that showed up in the legislature, before long the integrity of the entire franchise system is in peril.”
Wolters insists, too, that the only thing Texas ever asked from Musk was to comply with the franchise laws everyone else has to follow, and that Tesla would in fact fare better selling through a network franchise, one that would be of their own choosing.
While the franchise system once made sense as a way to deal with the capital-driven evolution of the auto industry with storing, marketing, and servicing cars, it has also resulted in higher prices for buyers. In fact, distribution can make up about 30 percent of a car’s final price. The internet has been largely responsible for making direct sale logistics much easier, resulting in more industries choosing to sell directly to the customer.
On the other hand, dealer associations across the state argue that consumers receive better service from franchised dealerships, particularly in the areas of warranty and lemon-law claims, than they would from factory-owned stores. They also argue that the franchise laws and licensure laws have worked well over time to protect the consumer. Typically, dealers are the ones who provide important services such as final inspections, detailing of vehicles before delivery, customer education and service during and after sales. Whether or not the Tesla business model can also achieve these services should be a major factor of whether or not the Tesla business model has long-term merit.
Published on March 16, 2014
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Direct Sales Model Seeks To Change Car-Buyer Experience.
Tesla has set out from the beginning to challenge everything in the auto industry. Tesla’s CEO Elon Musk characterizes himself as an outsider selling a an electric car the auto industry has said it couldn’t build or sell and he set up a network of dealers and chargers all owned by his company. The vertical integration might be something a founding titan like Henry Ford might have appreciated, but it has run into problems in 21st century automotive retail business world.
The issue is state-by-state franchise laws, which set up the conditions for the retail sale of automobiles. They have a long history, rooted in protection for local businesses against potential predatory practices by the deeper pockets of a factory-owned store. Consumer protections are also a part of the franchise system, in theory guaranteeing local recourse for any issue a consumer might have with a product that could have been produced on the other side of the globe.
Tesla argues that the model, like the auto industry itself, is dated and not reflective of new world of electric cars and online ordering. In addition, Tesla says as a start-up it poses little threat to larger, established dealerships and as a purveyor of online pure electric cars, it needs factory control to ensure the educational message about this new technology is fully transmitted.
As Musk told the Automotive News recently, “We’re in a tough spot because I’m not fundamentally opposed to franchising, but I think it’s really difficult for a new company with a new technology to be franchised. It’s not possible to effectively sell a new technology like electric vehicles, for a dealer to do that, without undermining the story behind gasoline cars.”
He added that once Tesla sales reached a certain threshold, said five percent of new car sales, then he would be more comfortable moving to a franchise system. To that end Tesla has supported bills in several legislatures authorizing their direct-sales model with limited success. Musk has also said he might seek national legislation that would override state laws against direct vehicle sales by the factory.
Here’s the state-by-state status of Tesla’s efforts, as compiled by Automotive News:
- In California, its home state, Colorado, Virginia and new Hampshire Tesla factory dealerships operate without trouble.
- On the other end of the spectrum, in Arizona, Texas, Maryland, Massachusetts and, most recently, New Jersey, Tesla is banned from setting up dealerships, limited its presence or sued to get it booted out.
Tesla has battles on several fronts
- In a slew of other states, Tesla’s model is being or has been challenged by legislation or regulation, including Washington, Minnesota, Ohio, New York and North Carolina.
- Tesla’s dealer status is less clear in several other states, including Oregon, Nevada, Missouri, Illinois, Indiana, Florida, Georgia and Pennsylvania.
- The remaining states (28 in all) don’t have Tesla dealerships yet.
- Of course, even without a dealership, you can arrange for the purchase of a Tesla online.
The most recent activity was in New Jersey, where the state’s motor vehicle commission ordered Tesla’s two stores in the state to close after a new rule on dealership licensing was adopted. Tesla claimed Gov. Chris Christies administration has promised to delay the regulation, which was favored by the New Jersey Coalition of Automotive Retailers. The governor’s office responded that it had indicated its position was that Tesla and the car dealers needed to find a legislative solution to the issue.
According to the National Automobile Dealers Association, 48 states have restrictions on factory-owned dealerships. In addition, Automotive News reports that NADA has said it would oppose any national legislation on the issue.
Meanwhile, Tesla is shifting some of its focus to selling the Model S in Europe and Asia while gearing up for sales of its second model, the SUV-like Model X, in the U.S.
Check out new contributor Spencer Blohm’s in-depth look at Tesla’s debacle in Texas here.
Photos by the manufacturer
Published March 15, 2014
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