Tesla, Rivian and Lucid snatch $910 million in profits from traditional California dealers

Tesla, Rivian and Lucid snatch 0 million in profits from traditional California dealers

In news that will either seem like an injustice or a schadenfreude depending on how you feel about the traditional dealership model, an industry publication Automotive Newsbased on data from JD Power, reports that direct sales operations like Tesla imposed a significant opportunity cost on California dealerships, ripping off $910 million in unrealized profits last year.

Divide that by the 1,303 traditional dealerships in the state, and the shortfall amounts to nearly $700,000 per store.

Tesla, Rivian and Lucid all sell directly to consumers, adding up to 12% market share in the state last year.

Some of that hurt is decidedly self-inflicted on the part of established car dealerships and manufacturers. Their supply of electric vehicles is running out, which means there isn’t much availability in parking lots, as Sierra Club research showed earlier this week. Two-thirds of dealerships contacted by the club did not have an electric vehicle on their lot, and in California, where demand is high, supply was found to be particularly low. Meanwhile, Tesla had no such supply constraint; dealerships pushed some customers into Tesla’s arms.

How JD Power arrived at the $910 million estimate:

  • There were 193,707 new vehicle registrations in California involving Teslas, Lucids and Rivians last year. (188,000 of them were Teslas.)
  • Last year, the franchise dealers’ average gross profit per vehicle transaction was $4,700. (That’s what Bricks and Mortars could have made on those lost sales. Tesla’s profit per unit is thought to be considerably higher.)
  • Total: $910.4 million, more or less a few million.

This is how things look in the state where EVs are hottest. Traditional resellers elsewhere may want to see this as a sign of trouble ahead.

“Product rules this industry,” said Brian Maas of the California New Car Dealers Association. A. “Dealers should go to their OEMs and ask for products to beat Tesla.”

For a deeper dive, check out the full report in Automotive News (subscription required).


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