Published on October 19th, 2014 | by James Ayre20
Tesla Going The Way Of Franchise Dealerships? Elon Musk Hints Yes
October 19th, 2014 by James Ayre
Elon Musk touting the idea of franchise Tesla dealerships? Sounds about right, doesn’t it? Wait, what?
In a rather surprising comment — but I guess he makes those a lot, doesn’t he? — Musk recently noted that as Tesla continues to expand it may need to utilize franchised dealerships, in addition to its Tesla Stores.
That’s a bit of a turnaround for Musk — and a bit humorous considering how hard the dealerships have been fighting against Tesla — but I guess that there’s some logic there. Once Tesla begins selling the Model X, and more importantly the Model 3, the potential is there for huge growth — perhaps a mixture of franchising and direct sales would be the right choice?
The comment was made in a recent face-to-face interview with Musk conducted by Autoline Daily’s John McElroy.
Here’s McElroy’s summation of the question: “When I asked him if he could really scale up his retail model in all 50 states of the US and asked how they would handle maintenance and repairs. Musk admitted that relying exclusively on company stores probably was not enough.”
Here’s Musk’s exact words: “We may need a hybrid system, with a combination of our own stores and some dealer franchises.”
Some ambiguity there, but the comments do square up with those made by Tesla’s Legislative Director Jim Chen last year at an industry meeting.
“In a closed door regulatory meeting in fall 2013, two witnesses cited Tesla’s Legislative Director Jim Chen who told a room full of industry stakeholders Tesla only means to sell factory direct until it reaches an undefined minimum volume threshold,” Hybrid Cars notes.
“At the time it was unclear whether Chen/Tesla meant such a thing, but this otherwise confirms what dealer associations have said, namely, that Tesla cannot likely grow the whole business to support Model 3 and beyond to the scale it wants with all that on its shoulders.”
With the release of the Model X fast approaching, I guess that we’ll probably find out sooner rather than later if there’s anything to these comments.
Image Credit: Tesla Motors