In Summary
  • Now, if non-domestic US sellers such as Mercedes-Benz and Range Rover can get really hot under the collar about such exports, what about a homegrown company like Tesla?
  • Besides the revenue loss, there is the real fear that the vehicle might end up in a market that does not respect intellectual property rights and the car might be reverse engineered. With this in mind, who, exactly, is going to sell a Tesla to a Kenyan?

Hello Baraza,

I’ve been a loyal reader of your column  and  admire the advice you give. My question  regards electric cars. The likes of Tesla Motors’ Model X. I’ve been reading a lot about this car in foreign tech blogs and so far it seems people are very impressed with it .My question is, do you think there is potential for this car in Kenya? If somehow I were able to import it,  what kind of challenges do you think I would face, apart from the charging issue? Would you advise me to buy it? 

Kirtan Patel

 

Hello Patel,

I seriously doubt that there is potential for this car in Kenya. Get me right - I did not say this type of car, but this particular one and here is why:

 

1. Left-Hand Drive and the American (USDM) export rules: First, Tesla is an American car company that  does not export to right-hand drive markets, which means that all the vehicles they make are exclusively left-hand drive. Besides the sometimes-here-sometimes-not embargo by the Kenya government on the importation of left-hand drive vehicles, there is the fact that these cars will be quite tricky to drive on our keep-left traffic setup, more so on a two-lane single carriageway. For instance, how would you overtake?

The United States is a strange place. To buy a high-end vehicle such as a Mercedes-Benz or a Range Rover, one has to undergo a background check and vetting to ensure one will not export it to the Middle East in general, and to the Taliban and/or the Islamic State in particular. China, too, seems to be blacklisted and there is an actual database of motor vehicle dealers expressly banned from exporting vehicles. The exportation seems to be a real problem, especially given that limited inventory and high tariffs in the affected areas mean that wealthy customers are willing to pay up to three times the advertised price for a black market car.

The illegality of this under-the-table export is not fully understood, but manufacturers want to squash it for two reasons: loss of sales and loss of money in future. Loss of sales stems from the fact that the insane import taxes levied on top-tier cars means that a company like Land Rover will sell their Range Rover luxury SUV for close to half a million dollars in China, but through the black market they get nothing. This leads to the second problem: paid-for after-sales service. From the initial lost sale also comes lost revenue in post-sale maintenance and repairs not covered by warranty.

Now, if non-domestic US sellers such as Mercedes-Benz and Range Rover can get really hot under the collar about such exports, what about a homegrown company like Tesla? Besides the revenue loss, there is the real fear that the vehicle might end up in a market that does not respect intellectual property rights and the car might be reverse engineered. With this in mind, who, exactly, is going to sell a Tesla to a Kenyan?

To make matters worse, your name betrays your race and the anecdotal evidence that pointed me towards this little bit of information in the first place arose from an incident in which a New Jersey Mercedes-Benz dealership got sued for discrimination on racial grounds by a man of Indian descent who went to  buy a GL Class SUV and was told he could not have one because he might sell it to the Taliban, simply because of his name and skin colour; never mind that the Taliban have nothing to do with India or vice versa. This was overlooking the fact that the man is a US citizen and had bought Benzes for the past 30 years without incident. Now, look at the man who has just been voted in as president of the US and tell me racial discrimination will not go away. Can you?

2. Supercharging: Elon Musk chose a strange word to describe the ultra-quick battery charging technique for his electric cars. Supercharging typically means forced induction for an internal combustion engine; but in Tesla’s case, it means charging an electric car really fast.

There is a dedicated Supercharger Network set up all over the United States exclusively for use by Tesla owners and it has been free of charge (pun intended) for unlimited use. Incidentally, Tesla just announced that from  January 2017, the charging will also be free, but only up to 400 kWh, after which owners have to pay for the electricity. Apart from that, Tesla still recommends normal charging with electricity that comes out of the wall at home and at work when the vehicle is not in use.

Even if you do manage to import a Tesla, what will be the pecuniary sense behind spending astronomical sums (Teslas are damn expensive) buying one if you are not going to enjoy the associated benefits?

3. Maintenance and Recalls: Lately, the motor vehicle manufacturing industry has been inundated with a flurry of recalls surrounding issues as insignificant as technical service bulletins (TSBs) for minor electrical glitches (General Motors’ ignition switch fiasco) to those as grave and expensive as the multimillion dollar settlements following the deaths of end users (the Takata airbags saga).

Should the car you buy be affected by a recall, replacement of parts and/or the vehicle itself will be out of your own pocket since you operate it in a place where they did not sell the car in the first place. And you will replace your car to avoid lawsuits; car companies go as far as hiring bounty hunters to track every single vehicle down and bully the owner into honoring the recall.

 

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