Tesla Motors doesn’t do anything like the competition. From sales to shareholder meetings, Elon Musk’s leadership is clear, as is his success.
Of course, not everyone likes the way Tesla Motors does business. Take, for example, the Tesla Motors sales model. Tesla Motors doesn’t sell the Tesla Model S through franchises like other automakers. Instead, Tesla Motors shows the Tesla Model S in Tesla Galleries and clients can buy a Tesla Model S online or in a Tesla Store. These are all wholly owned by Tesla Motors. Automobile dealer associations don’t like this, and they have even opened up legal proceedings to keep Tesla Motors from opening their stores in various states.
So far, there are Tesla Stores in ten states and Tesla Galleries in another four states. Tesla has won the right to sell directly to the consumer in some states, but in yesterday’s shareholder meeting Tesla Motors CEO Elon Musk nearly teared up expressing his feelings on the National Automobile Dealers Association [NADA] “…crowing about a perversion of democracy, that’s just wrong.” While some states, like New York, Minnesota, and Massachusetts, have overruled the dealer associations’ objections, other states, like Texas and South Carolina, aren’t seeing things so favorably.
Something interesting that Elon Musk mentions is how he envisions the automobile industry. He wants to make profits on sales, not service. This is similar to buying a printer for $50 when the ink cartridges themselves cost $50. The printer itself is worth more than that, but the company knows that you have to come back and buy ink. Similarly, new car dealerships don’t make a lot of profit on sales, but when they charge you more than $100/hr labor rate and pay the technician in the back $30/hr, where’s that other $70ish going? Pure profit, baby!
Now that brings us to the NADA, who has been working with states to keep Tesla Stores from opening, with varying degrees of success. Who is NADA working for but the automobile dealerships, of course! How do the dealers make their money but from overcharging for service? A while ago, I asked, “Is Tesla Motors upsetting the status quo in the automobile industry? Elon Musk mentions some polls addressing whether consumers want to deal with dealerships or direct sales. Between 85% and 99% of people polled in various states want direct sales. “Consumers will lead this revolution,” he says.
If clients want direct sales, I say let them have it, the answer to my question on the status quo… definitely! The dealer associations are just trying to protect their own pockets, not serve the customer, so let those people have their dealerships and let Tesla Motors have its direct sales. The customer will choose, with his wallet, which method he prefers.
Elon Musk is passionate about his company any his business, which is probably why he has been so successful. Among other things during the shareholder meeting, which was streamed live, Elon Musk mentioned an upcoming Tesla model that might drop below the $30,000 mark, which probably means $35-37K before incentives, but don’t quote me on that. We’ll have to wait till a June 20 announcement to see what he’s talking about with regards to a new supercharger enhancement that could allow for the “the Tesla Model S to be recharged… faster than you could fill a gas tank.”