Tesla CEO Musk – “We May Need…Some Dealer Franchises” – Video

3 years ago by Eric Loveday 40

Autoline’s John McElroy conducted a one-on-one interview with Tesla Motors CEO Elon Musk over the past weekend.

One question McElroy posed to Musk was in regards to Tesla’s direct-sales model and the possible future need for Tesla dealerships.

As HybridCars writes of McElroy’s discussion with Musk:

โ€œWhen I [McElroy] asked him [Musk] if he could really scale up his retail model in all 50 states of the U.S. and asked how they would handle maintenance and repairs, Musk admitted that relying exclusively on company stores probably was not enough.โ€

Musk added:

โ€œWe may need a hybrid system, with a combination of our own stores and some dealer franchises.โ€

Check out the video above for more of McElroy’s discussion with Musk.

Show notes:

– Tesla Considers Franchise Dealers
– Camry Gets Major Mid-Cycle Refresh
– Toyota Hits 7-Million Hybrid Mark
– Hyundai on U.S. Diesel Bandwagon
– Vettel Hits Paydirt
– You Said It!

Source: Autoline

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40 responses to "Tesla CEO Musk – “We May Need…Some Dealer Franchises” – Video"

  1. Stimpacker says:

    EVERY single auto dealer today carries a “dealer markup” for hot, in-demand vehicles. Even Pontiac, in its dying days, had hefty dealer markups for the Solstice.

    That will conflict with Tesla’s existing fixed pricing model. So wonder how they will work this?

    1. Steven says:

      Easy, some customers will cross state lines to buy their Tesla.

  2. sven says:

    NO!!!!!!!!!!

  3. Big Solar says:

    Man, that guy is annoying.

    1. offib says:

      Wait till you see his honest attitude towards anything with a plug.

    2. Foo says:

      (in his voice) totally a-NOYY-ing!

  4. David Schurig says:

    Please, no!!!

  5. MDEV says:

    Can Tesla partner with PepBoys? just for maintenance. Just imaging dealing with the salesman at the dealership is very sad.

    1. Rick Danger says:

      That is exactly what Elio plans to do.

  6. Alex-VE says:

    Noooooooooooooooooooo!

  7. Mint says:

    If Tesla does go down this road, it’ll have to come up with a new sales model. Franchised dealers aren’t going to be happy if they spend time with customers who then buy online.

  8. Tech01x says:

    Dealership model is not superior at all for the sales experience. However, there is an opening for 3rd party service centers.

      1. Lustuccc says:

        +1 more

        1. Scramjett says:

          +1 too ๐Ÿ˜‰

  9. offib says:

    Hell above! We know that Musk admitted that a “hybrid system” is needed to be in place, but to immediately go off with a grin and claim that dealerships are “superior”? That ain’t right.

    1. Scramjett says:

      +1

      I seriously doubt that what Elon has in mind, when he refers to a “hybrid” system, would look anything like what this dude or NADA has in mind.

  10. rgreen says:

    Maybe this will be the next deal between Toyota and Tesla–Toyota dealers can handle the Tesla used car market and be an approved service center for new and used Teslas.

    1. sven says:

      I’d rather have eBay handle the Tesla used car market.

      1. Scramjett says:

        +1

    2. bioburner says:

      CARMAX for used car sales. Service centers can be built anywhere since they don’t sell anything.

  11. sven says:

    โ€œWe may need a hybrid system, with a combination of our own stores and some dealer franchises.โ€

    What’s next? A Tesla with an ICE range extender? I hope not!

    1. Lustuccc says:

      NEVER!!!

  12. Kubel says:

    Elon,

    Your dealership idea sucks.

    Regards,

    Kubel

  13. Rob says:

    Get real here. Tesla will need franchises for servicing its cars sooner or later. There is absolutely no way that can do it by themselves once hight number of their cars hits the road. That, of course, does not mean that it needs dealers for selling it cars. Maybe it is the hybrid model he is talking about.

    1. The dealership concept can be many things. One idea is that Tesla builds and owns a “traditional” style dealership complex, but to meet state / fed law, bids out the actual dealership part to the highest bidder with all the Tesla stipulations.

      That might be no dealer markup (Saturn did this), etc. if things go sour with contractor number one, they bid it again and get in a new dealer contractor. Tesla is always in control up to the existing legal issues.

      I will be happy to bid on such a dealership opportunity!!!

      On a more pragmatic level, to sell 500,000 cars might actually require that lots full of shiny new cars available for immediate delivery (along side the row of competing auto dealerships) is what gets the job down, in part.

      1. Dr. Kenneth Noisewater says:

        Seems fairly reasonable IMO, and allows for TSLA to allocate capital elsewhere. Heck, it could go hand-in-hand with CPO/used car sales as well: Tesla will need to handle an influx of other-brand tradeins one way or another anyway.

        However, they’ll need to be pretty hardass and develop ‘captive’ dealers, and that may run into various states’ laws I would think. I reckon it’d look like the following:
        * Dealer only allowed to sell new Teslas, CPOs and tradeins
        * Dealership name only allowed to be ‘Tesla of $LOCATION’
        * Dealer must service all Teslas regardless of where they were purchased
        * Dealer must provide multiple HPWCs, accessible 24/7, usable by all Teslas (though service-area HPWCs could be devoted to dealership-only use)
        * Dealer must use Tesla-provided blueprints/store layouts/designs to build their retail and service facilities
        * Dealers must provide equal or better customer experience as Tesla-owned stores, judged by customer feedback, with financial penalties and disenfranchisement possible for low-performers

        1. sven says:

          “Tesla will need to handle an influx of other-brand tradeins one way or another anyway.”

          Sell them at auction to car dealers.sven

          1. Glenn Mercer says:

            Doesn’t Tesla handle trade-ins now by handing them off to AutoNation? (I am not arguing any particular point, but making the point that they are already dealing with trade-ins, it’s not like it is a future issue.)

      2. Jeff D says:

        This was just what I was thinking when I saw this. This could be doable and not totally get away from what Tesla stands for. I could definitely see a need for this when Model 3 comes out.

    2. Glenn Mercer says:

      Crucial point you make here, though not explicitly: sales points (whether dealers, owned stores, cars catapulted from blimps, whatever) must scale with annual sales… service points must scale with cumulative installed base. (Thus we have 18,000 new-car dealerships in the USA but over 250,000 service locations.) I remember Bill Gates talking about very-early-stage Microsoft almost going bust when they realized they had to hire immense numbers of customer service reps, as service scaled with the growing Windows user base. (Someone will now insert the obligatory Microsoft-quality-is-so-bad-that-of-course-they-needed-all-those-reps-hell-Apple-needs-only-1-or-2 joke. (grin))

  14. Evil Attorney says:

    Knowing Musk, I bet he would set up a separate corporation owned by him to start/own barebones “franchises” in each hold out state. He could probably use them as regional repair centers as more Teslas are sold around the country.

  15. Chris O says:

    Looks like Musk is ready to give in to the franchise dealership blackmail and is ready to adopt a retail model that’s unsuitable for his product because his products don’t generate the sort of maintenance income needed to support those dealers and the moron in the video adds insult to injury by suggesting Musk is admitting this politically corrupting and universally despised system is “superior” somehow.

    Disgusting.

  16. sven says:

    Add Michigan to the list of states that are trying to ban Tesla’s direct sales approach.

    http://www.autonews.com/article/20141015/RETAIL07/141019925/anti-tesla-bill-reaches-michigan-governors-desk

    1. John from AA says:

      I spoke with my Michigan Rep today and he told me substantially what’s reported in the story — language was added under cover of night, legislators voted in ignorance of it. Leaving aside the question of how the f you can vote for something when you don’t even know what it says, the message was encouraging —

      – he thinks there is no chance Snyder will sign it,
      – he thinks there is no chance the language will survive redrafting.

  17. James says:

    The whole trade in, resell mostly lame ICE used cars model is so dead. I can’t see Tesla going there. Plus, “hybrid” label or not, other state dealer associations will point to those states where Tesla has franchises and use it against them. I don’t think you can have it both ways.

    1. Wrong. Used cars are usually quite profitable.

      But, I don’t see Tesla handling oil burner trade-ins except to wholesale them off.