Notably, one of the most significant differences between Tesla and other automakers is its direct-sale business model. With that in mind, all of Tesla’s stores, service, and delivery hubs are operated and managed by the company without using the third-party franchise dealership concept.
Remarkably, as owners upgrade or leases expire, the automaker has tight control over its used vehicles since it manages its own dealership.
Jimmy Douglas, Tesla’s director of sales and delivery operations, asserts that the company’s used car industry has become “as big as some publicly traded used car retailers”:
|“Most people don’t realize that Tesla runs its own vertically-integrated, nationwide online used car retailer. It’s as big as some publicly traded used car retailers you’ve definitely heard of, despite no Super Bowl commercials or wacky waving inflatable arm flailing tube men.”|
Since Tesla lists its secondary auto company in its revenue report under “service and other,” it is hard to determine its value from public filings. If Tesla’s used car industry represents 20% of that line item, its yearly run rate would be above $1 billion.
Notably, the latest quarter’s sales of $1.4 billion is an increase of more than 50% over the previous year. Alex Liebl, manager of Tesla’s Used Car Quality, just posted a new job offering, which Douglas mentioned in reference to the growing staff.
|“They are distributed across North America, ensuring every used Tesla meets our quality standards, so we can delight every customer at the point of delivery. Since Tesla doesn’t advertise, delighted used car customers are our version of Super Bowl commercials,” Douglas added.|
Impressively, Tesla has the advantage of having an efficient grip on the inventory even though it does not advertise its used cars. It was earlier reported that Tesla modified its policy and now forbids anybody from purchasing their vehicle once their lease is over. As a result, the automaker has more used cars available for sale.
Furthermore, Tesla initially stated that it intended to develop a fleet of autonomous electric vehicles, but it has yet to do so.
However, the failure to accomplish the initial plan has opened a new door for Tesla since it has a lot of cars coming off lease at the same time as used car values are at all-time highs.