Tesla Test-Drives World Dominationhttp://www.fool.com/investing/general/2013/03/05/tesla-test-drives-world-domination.aspx Tamara Rutter
March 5, 2013
Surviving as a car manufacturer these days requires more than just strong domestic sales. Today, auto companies must be multinational powerhouses if they hope to stand a chance in the auto industry. Tesla Motors (NASDAQ: TSLA) is no exception. If the electric-car maker wants a real shot at success, it needs to expand its global footprint.
The road less traveled
However, Tesla is discovering that changing the rules of retail for a century old industry won't be easy. At the end of last year, auto-dealer groups in New York and Massachusetts smacked Tesla with lawsuits for violating so-called state franchise laws. Fortunately, for Tesla, a Massachusetts judge denied the dealers' request to stop Tesla from operating its Boston location.
This was a big win for the EV maker as it gets ready to open new stores, not only in the United States but also worldwide.
As for retail locations in this region, Tesla currently has nine stores in major European cities, including Milan, Paris, and Frankfurt. In fact, international orders now make up about 25% of Tesla's Model S reservations. Not to mention that Tesla plans to expand its operations in Asia this year. The company currently has just two stores up and running in the Asia-Pacific market, one in Hong Kong and the other in Tokyo.
Tesla should see strong sales of its gas-free cars abroad, helped in part by soaring gas prices and rich government incentives for drivers of electric cars. In the Netherlands for example, EV drivers benefit from a laundry list of local encouragements, including use of bus lanes, free parking and charging, no road tax, no BPM tax, 136% flexible corporate write-off, MIA-regulation -- to name a few. Besides government incentives, Tesla's awe-inspiring showroom stores shouldn't have any trouble attracting visitors.
New market opportunities
If these new stores attract even a fraction of the attention they have in the U.S., it will be a success for Tesla. To that end, 1.6 million people visited a Tesla store in North America during the fourth quarter. This is impressive, considering Tesla had only 22 locations open during that period. This compares with literally thousands of Ford or General Motors dealerships in North America.
Not only do traditional automakers benefit from economies of scale -- something Tesla does not -- but they also have