This comes right in the middle of Tesla's shift from production hell to delivery logistics hell.
For those of you that have been hiding under the rock for the recent few years, Tesla doesn't do dealerships. The automaker does Tesla Delivery Centers and Tesla Stores. However, it seems that just that might be hurting the company's long-term success. Mike Jackson, the CEO of AutoNation, America’s biggest auto dealership group, claims that if Tesla hadn’t insisted on handling its own retailing, the automaker could have avoided the recent delivery struggles the company is facing.
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Last week, Tesla CEO Elon Musk tweeted that his company had shifted from production hell to delivery logistics hell. While Mike Jackson states that Musk should be free to run his business however he wants, he didn't resist taking a jab at the electric carmaker and its recent growing pains.
“For a boutique-y model, what he’s doing is fine,” Jackson said of Musk in an interview on Bloomberg Radio. “As soon as he wants to do volume, it’s gonna be an issue. Well, here we are, we’re now at the issue. It is hell.”
For Elon Musk, the main problem with traditional dealerships is commitment and cost. After all, most of these dealerships have spent decades selling ICE (Internal Combustion Engine) vehicles. Nobody knows how committed they would be in selling fully electric vehicles. Furthermore, the cost of selling the car through your website and through company-owned stores is minimal when compared to franchise dealerships. The company, in the end, gets to keep a large chunk of change in its pocket by effectively cutting out the middleman.
However, the decision to circumvent the franchise model has put Tesla on a collision course with dealer associations in several states, including Connecticut and Michigan, but also, it put the company in a bit of a bind in markets such as Canada as well. While Tesla managed to win several court cases elsewhere, Tesla and other carmakers face restrictive laws that prevent them from delivering or servicing vehicles.
But ultimately, Mike Jackson may be right. These are still low production numbers (though 7,000 deliveries in 7 days is surely impressive) compared to legacy carmakers. If Tesla is to survive the upcoming onslaught from the likes of Audi, Mercedes-Benz, BMW or VW, it will need to address the rising concern regarding delivery capabilities.
But, in the end, we're sure that Musk is on the right path to solving this conundrum as well. Meanwhile, with the growing number of Tesla vehicles being delivered, it seems some future owners (Model 3, especially) will have to stay put, hold tight and wait a bit longer, which is likely not a concern, seeing as how dealing with dealerships can be among the most frustrating experiences.
Source: Auto News