Shift
This afternoon I chatted with a guy standing on the sidewalk outside my apartment. He works for a new company called Shift which I had never heard of. It's an internet service for buying used cars. Buyers select the pre-certified cars they want on an app. This guy arrives with the vehicle. The customer gives it a test drive while he waits. If the buyer likes the car Shift takes care of all the Department of Motor Vehicles paperwork and financing electronically and he hands over the keys. The Shift employee isn't a salesman. By the time he arrives the customer has already selected the vehicle and knows the fixed price. He's just there to deliver the car.
My first thought was... If this scales up (as I think it may) how does this affect existing municipal sales tax dynamics and land use patterns? Car dealerships are exactly the kind of big ticket cash cow that towns want in their territory. So much so that “business friendly” economic development policies are often lovingly handcrafted using specific zoning designations and special subsidies to induce auto malls. Dealerships know they’re in demand so they play towns off each other in their negotiations for endless freebies. Neighboring local governments have engaged in turf wars for decades to attract and retain these establishments.
Meanwhile, every new Tesla is purchased exclusively online. This is in direct contradiction to 100 years of nationwide legislation associated with legacy auto manufacturers. It’s illegal for Ford, Chrysler, or General Motors to sell a car directly to customers without going through a dealership.
This is invariably a miserable multi hour experience that leaves buyers feeling like they need a Silkwood shower by the time the get home. Tesla retail shops, in contrast, aren't there to sell cars. Instead, they're physical advertisements in high traffic upscale retail districts that allow lots of ordinary people to see and feel the vehicles in person before going home and ordering one via the internet.
A friend down in Southern California recently bought a Tesla Model Y on his phone. There are only a handful of options so he picked the exterior and interior colors and the extended battery range. The prices are fixed so there’s no haggling. He was then notified of where and when to pick up his new vehicle.
Tesla temporarily rented a portion of a parking lot and set up a logo tent as if it were a weekend farmers market. The location changes all the time based on where the latest batch of customers happen to be. An employee in a branded polo shirt had my friend sign some electronic documents then directed him to the appropriate parking spot for his car. Tesla provided the seamless financing and insurance at preferential rates and deep in house discounts. It all took five minutes. Done.
I have no particular interest in cars one way or another. But I’m fascinated to see how the "dematerialization" of auto sales will change the physical landscape. Sales taxes will still be collected, but there’s going to be a reshuffling of how that money is distributed. From a legal standpoint will these taxable sales occur at the customer's home address like an Amazon delivery? Will it happen at the address of the Shift or Tesla central office? Or the parking lot pickup site? Or someplace else? The more these nebulous sales ramp up the more picky the authorities are going to get about the precise definitions and procedures.
Land that’s currently used for car and truck sales may gradually become redundant and be freed up for other things. These facilities are ripe for repurposing as the economy and society morph. Municipalities will be pressed to create new rules about what is and isn’t permitted. Everything is subsidized. Everything is oddly stifled. Everything is artificially propped up or restricted. Sometimes by government edict. Sometimes by corporate shenanigans. Sometimes by popular demand. Usually by combinations of all of the above. And none of this is going away anytime soon. So the future will most likely look different, but be the same.
