How Apple, Inc. Could Help Tesla Motors Take on Traditional Car Dealerships

Apple Stores might eventually sell you a car directly. Image source: Apple.

Apple (NASDAQ:AAPL) is seriously considering making an electric car. This we know. What we don't know is whether or not the Mac maker will actually pull the trigger or not. But there's actually something else we know: We know how Apple would sell its Apple Car if it decides to move forward.

Much like Tesla Motors (NASDAQ:TSLA), Apple will pursue a direct sales model for all the same reasons it opened up its own network of retail stores 15 years ago.

Apple will be in Tesla's cornerTesla's battle with incumbent automakers over the traditional dealership model has waged for years, with no signs of letting up anytime soon. In fact, General Motors (NYSE:GM) just authored a bill in Indiana (HB1254) that would push Tesla out of the state based on protectionist dealer laws. Despite the fact that the average consumer is overwhelmingly in favor of direct sales, local lobbying is a powerful force and a meaningful campaign contributor.

However, if Apple were to jump in, it would absolutely push for direct sales. And Apple has a significantly larger customer base than Tesla. The electric automaker does its best to rally support to pressure policymakers, but Apple could potentially tip the scales in Silicon Valley's favor. This fight is really about bolstering public perception, because that will force the hand of lawmakers.

Education, not salesTesla's retail sales reps are not primarily trained or compensated on sales. In states where Tesla is allowed to sell through showrooms, reps do earn a small commission for sales, but it's a very small fraction of their overall compensation. This gives them some incentive, but also removes the high-pressure sales tactics that characterize the industry.

Tesla focuses on education at its retail locations, just like Apple. Image source: Tesla.

Instead, Tesla retail reps focus on education. Selling electric cars requires a significant amount of education. How long do I need to charge? What does electricity cost compared to gas? Can I take long-distance road trips when I want to? What's the difference between all the types of chargers out there? This is why the traditional dealership model simply would not work for Tesla. Not only do electric vehicles require less service than gas cars, thereby undermining one of the dealers' primary profit centers, but it also just takes a lot more time to close a sale.

You'll note that this is precisely the model that Apple uses, too. Apple Store reps are also primarily trained to educate consumers about the product. The key to this strategy is that the product sells itself. Significantly, this reinforces the view that the absolute most important thing for a company to focus on is creating a compelling product. If you get that right, the rest takes care of itself.

Inventory is evilDemand is so strong for Teslas that it doesn't even need to build inventory. Tesla can't even keep up with demand. This is how it is able to drive sales through Apple-esque showrooms at locations with high foot-traffic. Can you imagine General Motors selling cars in a mall?

It's not realistic for most automakers since they need to have inventory lots that take up a lot of real estate. But Tesla educates consumers about the car, and then they go order one online. It takes Tesla longer to produce and deliver the car, but it's worth the wait.

You can easily imagine Apple adopting an identical model. Apple allows customers to customize build-to-order Macs, and they're shipped directly from China to their doorstep. Apple wouldn't need a large inventory of cars on hand, and indeed Tim Cook believes that inventory is evil. Apple does have envious inventory turnover figures to maintain, after all.

It would be easy for Apple to implement a build-to-order model for electric cars, and it would have no problem with generating demand. Unlike Tesla, Apple's marketing machine is a beast (mostly because Tesla does no advertising).

To the deathOf course, dealers will continue to fight to the death (literally). The direct sales model is very much an existential threat. They'll cite things like "intra-brand competition" as proof that their existence is justified, even though the argument is fundamentally flawed.

Removing the middleman will reduce costs for consumers. Dealers compete to reduce their markup, but I think consumers would agree that they would prefer no markup whatsoever. This would also remove the whole haggling process, which is easily one of the most dreaded aspects of buying a car. Tesla doesn't negotiate because it doesn't have to.

Besides, can you imagine Apple negotiating on price?

The next billion-dollar iSecretThe world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.

Evan Niu, CFA owns shares of Apple and Tesla Motors. The Motley Fool owns shares of and recommends Apple and Tesla Motors. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Source: How Apple, Inc. Could Help Tesla Motors Take on Traditional Car Dealerships

EPA asks Volkswagen to make electric cars in U.S. to atone for rigged emissions tests

U.S. environmental regulators are not letting a crisis go to waste, seeking to make Volkswagen do more than fix the diesel engines that cheated on emissions tests.

According to a report in the German newspaper Welt am Sonntag, the Environmental Protection Agency wants Volkswagen to subsidize the electric-car industry to atone for the diesel-engine cheating.

According to the report Sunday, the EPA wants VW, the world's largest automaker by some measures, to produce electric cars at its U.S. manufacturing plant in Chattanooga, Tenn. It also is using settlement talks with the German giant, to get help in building a network of charging stations throughout the U.S. — the main practical problem with electric cars, given their short range.

The German report did not specify its sources, according to multiple accounts in the English-language press.

"Talks with the EPA are ongoing and we are not commenting on the contents and state of the negotiations," a spokesman for Volkswagen said. EPA refused to comment to Welt am Sonntag.

Source: EPA asks Volkswagen to make electric cars in U.S. to atone for rigged emissions tests

European All-Electric Car Sales Peaked At 27,000 In Q4 2015

European All-Electric Car Sales Peaked At 27,000 In Q4 2015

23 hours ago by Mark Kane

Renault ZOE

All-electric car sales in Western Europe in 2015 (source: EagleAID)

With some 11,000 all-electric car sales (and about ~33,000 sales when including plug-in hybrids), December 2015 was a record month in Western Europe.

Renault ZOE and Tesla Model S both exceeded 3,000 sales.

According to the EagleAID, the last quarter of 2015 was so far the best for Western Europe with around 27,000 BEV sales.

"For the electric car industry, doing business in Europe is still no stroll in the park. And yet, of late some encouraging signs have been spotted, adding a positive note to this now closely watched niche in West Europe's otherwise upbeat looking new car market."

"Never before in history have so many electric cars been registered in Western Europe in one month."

"Moreover, apart from setting a new all-time record in December, with registrations scaling the 11,000 threshold for the first time, that follows three successive good months when regional electric car registrations topped the comparatively high 8,000 level for three months running."

The other insight is that plug-in hybrids recently noted higher sales than all-electric in Europe. 2016 could be the tipping point.

Source: EagleAID

Tags: europe, sales, Western Europe

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Source: European All-Electric Car Sales Peaked At 27,000 In Q4 2015

There's one new Tesla car that nobody is talking about

Dennis Larson/FlickrSexy! See Also I want the sexy old Tesla back Elon Musk just announced 'Ludicrous Mode' for the Tesla Model S Here Are A Bunch Of Things Elon Musk's Tantalizing 'D' Could Be

Tesla launched its Model X SUV last year and will reveal its forthcoming Model 3 mass-market vehicle next month.

You can pre-order a Model X right now, but the Model 3 isn't expected to arrive until 2017.

These two Teslas are all anyone has been talking about lately — especially Wall Street analysts who want to figure out which way Tesla's extremely volatile stock price is headed.

But Tesla is working on another car that nobody ever mentions.

It's going to be such a fast and sexy car that CEO Elon Musk has reserved a special category of speed for it: "Maximum Plaid."

Like "Ludicrous Mode" — Tesla's current top-speed technology — the label is nicked from Mel Brooks' "Star Wars" parody, "Space Balls."

Ludicrous Mode already enables Tesla's Model S P90D sedan to serve up the kind of acceleration we normally enjoy in Ferraris and Lamborghinis. It weakens the knees to imagine what "Maximum Plaid" will feel like.

And the car that Tesla has designated for its 0-to-60 mph crown is a blast from the past: the Roadster.

Never fade away

Some Tesla observers suspected that the company was going to let its first car fade away. With a Lotus-inspired chassis and an early version of Tesla's electric powertrain, the Roadster was a blistering little thing, capable of sub-four-second 0-to-60 runs — with the top down — in "Sport" trim (a 2.0 version of the original Roadster). 

But Tesla isn't going to let the Roadster go the way of the Dodo. In fact, before 2020, a new Roadster should hit the streets.

Wikimedia CommonsSoon to be updated.

Even if you think Tesla should be all about building no-nonsense electric vehicles for the everyman — and that its priority needs to be beating back challengers on that front — you have to admire the company's dedication to its roots. 

You also have to appreciate that while Tesla is trending in the direction of boring with its master plans, it doesn't want to abandon sexy completely.

The whole point of the original Roadster was to change hearts and minds about electric cars. They didn't have to be glorified golf carts; they could be hot and dazzling and super-cool paradigm-shifters. The Roadster was astonishing when it hit the scene in the mid-2000s. We don't see them as often as we used to, but when we do, they still turn heads. "Wow! That's a Tesla!"

The way it's done

In many respects, Tesla has shown any new entrant to the auto space how it's done. You have to grab the public by the lapels and shake.

Just look at Faraday Future, a mysterious new carmaker, and what it did at CES earlier this year. Faraday's plans for world domination rest on developing a very flexible platform for EVs and connected cars. But what they pulled the cover off of in Las Vegas was a concept that looked ready to run the 24 Hours of Le Mans on the rings of Saturn.

Faraday FutureFaraday Future's wild concept.

For the past few months, plenty of worry has been expressed about Tesla's prospects, as it struggles through some obvious growing pains. But the idea that Tesla will ultimately be selling at least four and probably more cars, with a overtly high-performance two-seater at the pinnacle of the range, should be reassuring.

This is what the world's premier automakers, from Porsche to BMW to even General Motors (Corvette, anybody?), all do: build really compelling cars, at times versatile, at times dull, but also at times frivolous.

And don't forget, as much as Tesla is about self-driving cars and vehicles than can be transformed via overnight software releases, the company's DNA has wound into it more than a fair amount of rubber-meets-the-road. I've driven the Roadster, and I'm here to tell you, although it may have been the car of the future at one time, it was also damned thrilling to pilot on a sunny day in Southern California.

The Roadster was the Tesla that started it all. Everyone should be talking about how great it is that Tesla is going to keep it around.

raneko/flickr

SEE ALSO: That new Tesla probably won't be as cheap as you think NOW WATCH: Here's what it's like to drive a Tesla on the new Autopilot mode Please enable Javascript to watch this video
Source: There's one new Tesla car that nobody is talking about

You Need $1000 To Reserve Tesla's Most Affordable Electric Car

Manchester United loss to FC Midtjylland no shock, says Andy HinchcliffeFC's Craig Burley is surprised Louis van Gaal is still in charge of Manchester United after their 2-1 defeat at Midtjylland. But the Dutchman, like the rest of the United team, offered little in the second half as the home side came back to win.

School sends parents snarky 'Hurt Feelings Report,' making fun of whinersThe school spokesperson told NBC10 that the incident didn't reflect the views of those who work in the school. Good that they apologised, but I don't think it means they don't care about the kids".

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Terry ruled out of Manchester City clashHiddink welcomed some of the rumoured reforms reportedly being considered for the FA Cup , "a charming tournament". Pellegrini says the Champions League last 16 away leg against Dynamo Kiev next Wednesday is more important.

Jeb Bush's inscribed gun hits Twitter with a bangSo many ways. "If he ends up fourth there ( South Carolina ), what justification will he have for continuing?", wrote David A. Another Twitter user pointed out the difference between Jeb and his father, former President George H.W.

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Samsung Galaxy Note 5 Still Left Hanging, Marshmallow Wait Still OnMany people still own the LG G2 and they too have been wondering if they are going to be treated to the update. On Wednesday, Samsung also shared some features Galaxy devices will get following the Marshmallow update.

Flint To Get An Additional $2 MillionDykehouse used white paint that's made with lead in the painting as a permanent reminder of children affected in Flint. The order came four months after elevated lead levels were found in blood samples taken from children in Flint.

Anger following dolphin death on Argentine beachTourists took pictures, including selfies with the dolphin, before leaving it on the beach after it had died due to dehydration. The videos and images on the internet stand testimony to the recklessness and cruelty of people in the face of wildlife.

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Source: You Need $1000 To Reserve Tesla's Most Affordable Electric Car

The Kochs Are Plotting A Multimillion-Dollar Assault On Electric Vehicles

The oil and gas industry may have thought it had killed the electric car, but sales -- boosted by generous government subsidies -- rose dramatically between 2010 and 2014, and energy giants are worried the thing may have come back to life. 

Time to kill it again. 

A new group that's being cobbled together with fossil fuel backing hopes to spend about $10 million dollars per year to boost petroleum-based transportation fuels and attack government subsidies for electric vehicles, according to refining industry sources familiar with the plan. A Koch Industries board member and a veteran Washington energy lobbyist are working quietly to fund and launch the new advocacy outfit.

Koch Industries, the nation's second-largest privately held corporation, is an energy and industrial conglomerate with $115 billion in annual revenues that is controlled by the multibillionaire brothers -- and prolific conservative donors -- Charles and David Koch. James Mahoney, a confidante of the brothers and member of their company's board, has teamed up with lobbyist Charlie Drevna, who until last year helmed the American Fuel and Petrochemical Manufacturers, for preliminary talks with several energy giants about funding the new pro-petroleum fuels group.

Late last year, Mahoney and Drevna flew into San Antonio to explain the need for a new group to executives at two Texas refining giants, Valero Energy and Tesoro Corp. Then, in late January, Mahoney moderated a seminar on "Changing the Energy Narrative" at the brothers' twice-a-year retreat for mega-donors in California. The panel drew a mix of CEOs from big energy companies and other wealthy attendees who, in conjunction with the Koch brothers, bankroll numerous conservative advocacy groups. And last month, Mahoney and Drevna had further conversations with Koch executives about the new project, sources say.

Neither Mahoney nor Drevna returned multiple calls seeking comment about the new group. A Koch spokesman also didn't respond to a request for comment.

It's not clear when the still-unnamed group will be launched, but energy industry sources predict it's likely to be up and running by this spring or summer, and that Koch Industries -- or a Koch foundation or allied nonprofit -- will be the lead financier.

"The fact that Jim Mahoney is leading the effort appears to indicate that this is being driven by the business side of Koch," rather than the political operation that helps oversee the brothers' conservative advocacy empire, said one refining industry source familiar with the early plans for the new group.

Once launched, the new group is expected to use paid and earned media to push its pro-petroleum transportation messages, and do research to bolster the cause.

"I think they (are) approaching all the major independent refiners," added a second industry source, who requested anonymity because he had not been authorized to speak about the private discussions. The group's broad mission will be to "make the public aware of all the benefits of petroleum-based transportation fuels," he explained, adding that "the current administration has a bias toward phasing out" these fuels.

The source also stressed that the new initiative is partly attributable to "electric vehicles and the subsidies for them." 

"They're worried about state and community subsidies," he added. "In 20 years, electric vehicles could have a substantial foothold in the U.S. market."

The fledgling Mahoney and Drevna efforts seem to signal an expansion of Koch-backed drives against subsidies and tax breaks for alternative fuels to the transportation sector, at a time when support may be on the rise in Washington and some states for boosting electric vehicles.

Industry analysts and conservatives familiar with Koch world say the new initiative seems to fit the playbook that advocacy outfits backed by the Koch network have deployed in recent years to fight solar and wind power, battles that are fueled by ideology mixed with bottom line concerns.

"The Kochs have invested heavily in a pugnacious defense of fossil fuel consumption," said one conservative energy analyst. "They've done this in the electricity sector, and as the debate shifts to transportation they're behaving true to form."

Other energy analysts point out that electric vehicle usage is likely to accelerate before long, which could catch a number of energy companies off guard.

"Electric vehicle adoption started slowly, but it certainly is going to follow an exponential growth trajectory," said Varun Sivaram, an energy and environment fellow at the Council on Foreign Relations. "Once electric vehicle adoption hits a critical mass, I think it will take refiners, petroleum producers and automakers by surprise."

More broadly, some veteran energy lobbyists note that attacks on electric vehicle subsidies could backfire.

"Producers and refiners need to be careful in going after clean energy subsidies and incentives -- unless they're being paid for by the petroleum industry," said Don Duncan, a former top lobbyist for ConocoPhillips (which has now split in two). Duncan added that attacks on clean energy subsidies potentially "could again refocus the debate on subsidies and incentives enjoyed by producers and refiners."

Electric vehicles make up just 1 percent of the U.S. market, but some analysts see them rising to as much as 5 percent by 2025. Much of the impetus for boosting electric vehicles to curb climate change is coming from the government in the form of tax breaks and subsidies, and that's a key reason why Koch and some refining industry allies are riled up.

Not long after the Obama administration took office, it set an ambitious goal of having 1 million plug-in electric vehicles on the road by last year. But only some 400,000 have reportedly been sold in the U.S. to date. In a new effort to spur the electric car and driverless car markets, Obama early this month called for a $10-a-barrel oil tax, a proposal that has little chance of passing Congress.

For Koch and other large refiners, the impact of a growing electric vehicle market could be significant down the road. Koch Industries' refining, pipeline and exploration operations contribute a healthy chunk of its $115 billion in annual revenues.

In their early forays to find financial backers, Mahoney and Drevna have turned to some old allies. Koch Industries has teamed up with Valero and Tesoro before. In 2010, Valero and Tesoro were the leading donors behind a multimillion-dollar California ballot initiative that was aimed at killing new state standards to reduce carbon emissions. Koch was also a big donor to the ballot campaign, which was defeated by environmental groups and other liberal interests.

The new group's formation comes in the wake of other discussions in Koch circles, going back to 2013, about building a stronger pro-fossil-fuels message. At a donor retreat in mid-2013, discussions were held about the need to do more to bolster traditional fuels, according to an April 2014 email that Koch operative and fundraising honcho Kevin Gentry sent to scores of donors.

In that email, Gentry alluded to the importance of a new initiative that would "drive the national narrative around energy and the tremendous benefits of reliable affordable energy for all Americans, especially the less fortunate." Gentry indicated that the energy initiative would be mounted by Freedom Partners, the fundraising hub for the Koch donor network which officially hosts the semiannual donor retreats.

To be sure, the Koch brothers and their network allies have long backed several nonprofit groups that have spent millions of dollars to fight alternative energy, notably wind and solar power projects, and poke holes in climate change science and regulations. The Koch brothers have repeatedly voiced skepticism that fossil fuel use contributes to global warming, and have long maintained that subsidies and tax breaks for alternative energy don't fit with their free-market libertarian ideology. 

In a twist, Koch interests held talks more than a year ago with Securing America's Future Energy, a group focused on reducing American dependence on foreign oil, about making a sizable investment, say two sources familiar with those talks.

SAFE, which was launched in 2006 with major funding from FedEx CEO Fred Smith, never received any Koch money, a spokesperson said.

The group seemed an odd choice for a Koch investment: One of its key priorities is promoting alternative transportation, including electric vehicles.

While the full dimensions of the Mahoney-Drevna initiative aren't clear, some sources believe there could be some overlap with other advocacy outfits backed by the Koch donor network. "The new organization may be doing work that's now being done by the Institute for Energy Research," a Koch-backed think tank, according to one source.

Although IER in recent years has issued several statements and papers attacking electric vehicle subsidies as part of a broad pro-fossil-fuels agenda, the new initiative is expected to expand the focus on electric vehicles and sell its message to a bigger audience through ads to generate more political backing.

Serendipitously, Drevna became a "distinguished senior fellow" at IER last May, after he left his perch running the American Fuel and Petrochemical Manufacturers. The month after Drevna came aboard, the think tank posted a new paper attacking subsidies for a leading player in the electric car market: Elon Musk's Tesla Motors.

Source: The Kochs Are Plotting A Multimillion-Dollar Assault On Electric Vehicles

Aston Martin Electric Car To Possibly Roll Out In 2018

The hype for electric cars is just beginning, and British luxury car maker Aston Martin wants to be in on the hype, partnering with Chinese company LeEco in order to speed up production and be ready by 2018.

By Jerri Lynn | Feb 19, 2016 08:58 AM EST

Aston Martin teams up with LeEco to create an electric version of its Rapide S model, and hopefully produce more electric car models in the future. (Photo : Twitter Photo Section)

British luxury car maker Aston Martin Lagonda Ltd., is partnering with LeEco, a Chinese consumers electronics company, in its pursuit to produce an electric car by 2018.

The partnership also opens the potential for Aston Martin to work with startup electric car maker, Faraday, as it is also backed by LeEco (formerly known as Letv). The team up is all in line with LeEco's plans to build a U.S.-based factory that is set to focus on the production of consumer electric cars, and make it available to the market by 2017, according to Wall Street Journal.

To start off the project, Aston Martin and LeEco is eyeing an electric version of the British car maker's Rapide S model, before proceeding to developing other potential electric vehicles for both companies.

"It brings Aston Martin's electric car project forward," said Andy Palmer, Aston Martin Chief Executive. Palmer also revealed that the cars will be manufactured in a factory in Gaydon, England, according to Reuters.

The partnership of the two companies is also a show of force by the Chinese tech industry, as more companies showcase that they are now capable of supplying cutting-edge vehicle technology, far from the time when they were only expected to produce low-tech car part supplies, according to USA Today.

China has also been looking for ways to lessen the pollution in its country, and electric cars are on top of its list of solutions. As a result, the demand for electric cars has quadrupled over the last year, with China as the biggest market, Reuters added.

Tags: Aston Martin, Aston Martin Lagonda Ltd., LeEco, china, Chinese consumer company, Letv, Faraday, electric cars, Aston Martin electric car, Aston Martin Rapide S, Andy Palmer, China electric car market
Source: Aston Martin Electric Car To Possibly Roll Out In 2018