While many companies have entered the retail automotive space trying to capitalize on the experience customers want but are not getting from dealers, the biggest threat is actually looming on the horizon: The Tesla Model 3.

Until now, Tesla has bucked the system while pushing its direct-to-consumer sales model. However, their past vehicles were limited in quantity and priced too high for most Americans. Well now, the Tesla Model 3 with its $35,000 price range poses a direct challenge to many automakers.

Tesla has literally smashed all industry pre-order records with $1,000 deposits from a staggering 600,000 customers -- that’s $600 million in deposits from customers who haven’t even seen the vehicle, let alone given it a test drive!

When the Model 3 hits the streets – should consumers fall in love, which seems like a given at this point -- the auto industry will have to fight back – and fast. Everything will have to change – sales models, service departments, the customer experience… you name it -- will need to change.

Think about this:

Tesla is a software platform that has wheels. While American cars are wheels that have software.

Customers will now KNOW – on a mass scale – that buying a car completely online is very possible, not simply a pipe dream delivered by a handful of automotive companies. In fact, Hyundai has already realized this and now offers its highline model, the Genesis, to Canadian customers purely as an online purchase.

Customers will EXPERIENCE – on a mass scale – that they no longer have to visit a dealership for vehicle service. Almost all of Tesla’s components can be tweaked with over-the-air software updates.

Customers will UNDERSTAND – on a mass scale – that electric vehicles are practical and can save them money on fuel costs. It’s estimated that if a consumer drives 15,000 miles per year in a Tesla Model 3, they will only spend $602 on fuel for the ENTIRE YEAR.

Once consumers understand all the benefits of the vehicle, the experience and the entire Tesla process, dealers who haven’t adjusted to provide a similar experience will risk going kaput. And those that don’t understand the necessity of building customer loyalty NOW, will go kaput the fastest.

If we as industry fail to counteract Tesla’s moves now, Tesla will simply keep chugging ahead until, one day, dealers will no longer see Tesla in the rearview mirror but, rather, will watch their taillights as they pull further ahead.

Survey:

Do you think the Tesla Model 3 will have a major impact on the auto industry?

1. Yes

2. No