After Tesla shifted entirely to online car sales in 2019, other US automakers could follow suit, seeking lower costs and wider distribution
Paul Stenquist / New York Times : Tweets: @allendowney , @dealbook , @erikloomis , @sawyermerritt , @nytimesbusiness , @nytimesbusiness , and @nytimesbusiness Tweets: Allen Downey / @allendowney : I don't know if they would sell more cars if dealerships were less awful. But they would sell more cars to me. I keep cars for 20+ years precisely in order to minimize the number of dealerships I encounter in my life. https://www.nytimes.com/... @dealbook : More carmakers are considering direct-to-consumer sales, and consumers are getting more used to buying vehicles online. But with fewer service centers in some cases, customers can have problems with repairs. https://www.nytimes.com/... Erik Loomis / @erikloomis : There is no more egregious waste of land than the gigantic car dealership. In Japan or Korea, these things don't even exist except for a tiny storeroom where you make your order. https://www.nytimes.com/... Sawyer Merritt / @sawyermerritt : NYT: In 2019, auto experts said Tesla was making big mistake by deciding to sell cars only online, arguing that whatever bad feelings people had about dealerships they were essential to the car business. The strategy appears to be proving naysayers wrong. https://www.nytimes.com/... @nytimesbusiness : “Our data shows consumers want to do more of the process online but most don't want to eliminate the dealer visit altogether,” said Michelle Krebs of Cox Automotive. https://www.nytimes.com/... @nytimesbusiness : Many auto experts were doubtful when Tesla began selling its cars entirely online in 2019. Now, as the company dominates the fast-growing electric car market, other carmakers are starting to follow suit. https://www.nytimes.com/... @nytimesbusiness : Tesla's approach to selling cars only online has been copied by other electric carmakers, like Rivian and Lucid Motors, and could eventually have major ramifications for the entire industry. https://www.nytimes.com/...
Context & Ripple Effects
Tesla cut dealers out entirely in 2019, and the EV startups that followed its playbook — Rivian and Lucid — proved the direct model could launch brands without franchise networks. What changed since is demand-side proof: online used-car sellers like Carvana, Shift, and Vroom posted record sales during the pandemic-era chip shortage, normalizing the idea of buying a vehicle without setting foot in a showroom.
The distribution layer is also being rebuilt around the incumbents rather than against them: Amazon is opening its marketplace to US dealers starting with Hyundai, which means even franchise-bound automakers now have an online channel short of going fully direct. That backdrop is why the NYT piece lands — legacy US automakers weighing Tesla's model are no longer betting on unproven consumer behavior.
First-order effects
- Legacy US automakers considering the switch face an immediate trade-off: shedding dealer-franchise overhead cuts costs, but dealers still sell most new cars, so any move threatens the network that moves their volume today.
- Rivian and Lucid, already running Tesla-style online-only sales, gain validation — their cost structure stops looking like a startup quirk and starts looking like the benchmark.
Second-order effects
- Franchise dealers respond by repositioning around what direct sales can't replace — delivery, trade-ins, and service — while marketplaces like Amazon give them a digital storefront that lets them keep inventory risk without ceding the customer relationship entirely.
- The software gap becomes the gating factor: Volkswagen's ID.3 software failures forced a reboot of its software business, a warning that legacy automakers can't run a credible online-first retail experience without fixing the in-car and commerce software underneath it.
Third-order effects
- If the pattern holds, US auto retail splits into two structures — EV-native brands selling direct at lower cost, and legacy brands selling through hybrid dealer-plus-marketplace arrangements — with the dealer's role shrinking from price-setter to fulfillment and service node.
- Consumer habit data like Amazon's own finding that only 11% of its customers report buying $1,000+ items suggests the transition will be uneven: high-ticket online car buying stays niche until trust and financing flows mature, keeping dealers relevant longer than the Tesla template implies.
The trend: US car retail is migrating from franchised showrooms toward direct-to-consumer digital channels, led by EV makers and accelerated by marketplaces, with legacy automakers' pace set by their software readiness.