At first glance, the numbers Automotive News reporter Hannah Lutz highlights in her report on electric vehicle makers disrupting franchised dealers in California and a handful of other states are startling.
Dealers, who once had a hand in every new light-vehicle sale in California, have lost nearly 12 percent of the market to Tesla, Rivian and Lucid, companies that sell directly to consumers.
The average California dealer lost about $700,000 in gross profit opportunity last year. The market erosion for dealers is spreading to Colorado, Washington and other states that follow many of the Golden State’s environmental and motor vehicle policies.
While Tesla and other EV startups have capitalized on the direct sales model, it’s unclear how far that can go. That top line may represent Tesla’s success and a dearth of compelling EVs from legacy automakers, something that’s about to change with the rollout of dozens of new models in the coming years.
Then there’s the lack of capital issue.
Automotive News reporter Molly Boigon details in her story about startup cash burn rates so high that Tesla could be the only survivor. Rivian, Lucid and others are gobbling up cash at alarming rates and will soon need more money. Remember Lordstown Motors and its Endurance pickup? It is warning of a possible bankruptcy. Faraday Future has about one month of cash in the bank.
These companies have found that starting an auto company is not simple. Franchise dealers will continue to see Tesla make sales, but it might turn out to be the only lasting challenger to their century-old sales model.