Karma may use a pared-down version of Tesla's direct-sales model

August 8, 2016

What goes around, comes around--and this time the "what" is Karma Automotive (formerly known as Fisker Automotive). In its new incarnation, Karma's Chinese masters have decided not to follow in the footsteps of fellow U.S. start-up, Tesla, and will instead distribute Karma vehicles largely via a network of franchised dealerships.

Those dealerships aren't new. Karma plans to place its high-end vehicles into existing shops that specialize in luxury brands like Lamborghini and Rolls-Royce. (The company's new, $100,000+ Revero should be a fairly good fit for that market.) Karma's network will consist of about ten dealerships to start, which will be dotted across the U.S. and Canada.  

However, that won't make up the entirety of Karma Automotive's sales plan. In fact, the automaker intends to create a handful of its own Tesla-like showrooms, or "brand experience centers". They'll be located in place like California, where franchise laws are a bit more flexible. 

This hybrid approach to selling Karma's high-tech hybrids could weigh in the company's favor.

For starters, Karma won't have to endure the long, brutal legislative battles that Tesla did just to put its cars in front of consumers. The company would need a CEO as charismatic as Elon Musk for that--not to mention some very deep pockets.

By going this route, Karma may also avoid inciting resentment from dealer networks. In fact, we fully expect some of those statewide organizations to point to Karma's strategy as an example of how things could've worked for Tesla, if only Musk & Co. had been more willing to play by the rules.

However, opening a couple of showrooms in key locations like Orange County, California will give Karma more control over its messaging, and it could lay the groundwork for a much larger network of showrooms down the line. If the Tesla model catches on, Karma might find itself in a very strong position--assuming it survives, of course.

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