Skip to main content

Toronto's Yorkdale mall is crowded even on this Monday afternoon. And that's great news for Tesla Motors, which sells its electric cars across the hall from where Apple hustles iPads, and John Varvatos, inventor of the boxer brief, sells his tailored sportswear.

A red Tesla sign glows out front. Inside, there's only room for two cars and one naked chassis to show off the all-electric guts of the Tesla Model S. On the walls are giant touchscreens, paint and leather samples and a large selection of branded T-shirts and water bottles.

You can order your Tesla online if you'd prefer. But you won't be able to pick it up from a store right away because there's no inventory lot around back – every car is made to order.

Dealerships such as this one have landed Tesla Motors in trouble in the United States, because it's not a dealership at all; it's a factory-owned store. Tesla sells cars directly to customers, cutting the usual independently-owned dealerships out of the car equation entirely.

Recently, Michigan's Republican governor, Rick Snyder, signed a bill that bans any auto maker in the state from selling directly to consumers through factory stores. States with similar bans include Texas, Arizona, Virginia and New Jersey. Other states place restrictions on the number of cars Tesla stores can sell, but in all jurisdictions customers can still buy the cars online. In other words, it's a mess.

And what about Canada? Tesla Motors will soon open its fifth store in Canada, and company spokeswoman Alexis Georgeson says that so far Tesla has faced no push-back from Canadian dealership groups or lawmakers.

Huw Williams, spokesman for the Canadian Automobile Dealers Association, said simply: "Tesla's an interesting example, but I think for more than what structure they put together. They're a very small manufacturer and they've obviously got a different product offering. So we'll see what ultimately ends up happening on their [sales] model."

"We're watching the Tesla development," Williams added.

As for which sales model is better for consumers, both factory stores and dealerships have their benefits.

Williams pointed out that having dealers compete against each other for sales and service means consumers can get a better price.

Georgeson said that since Tesla has no middlemen, its prices – while fixed across all stores – are lower than they would be if a dealer was involved.

Tesla's aim with the factory stores isn't just selling cars, she said over the phone: "Our first priority is to educate people about what it's like to own and drive and live with an electric vehicle." The result is a low-pressure sales environment.

Franchise owners are more invested in the operation, Williams suggested. "I think there's just a fundamental difference in terms of the relationship with the community and customer when your money is on the line and your reputation is on the line and your family business is on the line."

Walking into the Tesla store, it's immediately clear that traditional dealerships could take a few lessons. Nobody liked shopping for a laptop until Apple stores popped up and let millions of people take fun house photos of themselves using the iSight camera. You could walk in, play around and walk out without ever feeling like you had to buy something.

Tesla feels similar. It encourages button pressing and exploration and questions. Could you ever imagine doing that in, say, a Cadillac dealership, just for the hell of it because you were in the neighbourhood?

Will Nicholas, a communications manager at Tesla, said sales reps often give test drives to people who, "probably aren't financially qualified" to buy the car. Word of mouth is a powerful thing.

Location plays a big role, too. "Apple has to be nearby, and some kind of luxury fashion," Nicholas said. Tesla stores are a world away from dealership row.

As refreshing a car shopping experience as it is, don't expect to see the Mercedes-Benz AMG Studio opening up next door, or the Porsche Performance Shop across the hall. Instead, expect Tesla stores to begin to look a little more like dealerships in the future.

As the company grows – Tesla will add a second car, dubbed Model X, to its lineup in the third quarter of 2015 – the sales approach will have to change. Educating consumers will naturally take a back seat to sales once the brand is sufficiently saturated in the market and electric cars are common enough.

And so despite what some dealers in the United States apparently fear, we're not about to find ourselves shopping for cars at factory stores in the mall while dealership row sits empty and abandoned. Tesla's factory stores are few and far between in Canada, and they still feel like a novel experiment – one that makes car shopping, almost, fun.

As I'm leaving the Tesla store, a couple of teenagers walk in and head for the big touchscreen on the wall.

Like us on Facebook

Add us to your circles

Sign up for our weekly newsletter