If I was a betting man, I'd short Tesla's stock. The company's the darling of Wall Street. One reason is the company's leadership. Investors love confident men who deliver. Tesla has been doing that in spades recently. Musk and his company also have a devoted following that like to go to Tesla events, go on forums and write testimonials about the car and they're willing to defend it anytime anywhere. This cult following is not unlike Apple. You can even see it on the company's website, which reeks of simplicity. However, all is not well at Tesla. There's a dealership a couple of blocks from where I live. The place is not big and, when I visited last month, it was empty and there were only two people on duty, sitting behind Apple computers. While the company's flagship car, the Model S, is a technological wonder, its creature comforts leave you wanting. The premium leather in the Model S pales in comparison to the Nappa leather in my X5. The one in the Tesla is much thinner. Also, the car felt cheap inside. The people at the dealership were quite knowledgable but they were not as excited about their product as I expected them to be. I left disappointed.
However, the aforementioned problems pale in comparison to Tesla's major problem: it's insistence that it run its own shops. This may create a larger margin (Tesla does not even offer discounts) and better customer service (maybe not, but at least they'd have more control over the narrative) but it leaves a lot of money on the table. Dealerships may not have the best reputations but what they do have is proximity to customers. Given the inherent limitation in Tesla vehicles, no one wants to drive hundreds of miles just to have the pleasure of being in a Tesla-owned dealership. What people do want is convenience and dealerships provide that. Third party dealerships also take part of the risk of expansion. This is great for a startup that cannot spend the capital in unfamiliar territories and it leaves headquarters to concentrate on how to make a great product. Finally, dealerships allow more people to test drive the vehicles. This is not possible when there are only like 3-4 Tesla-owned stores in New York state. The insistence on having your own stores limits Tesla's reach (there's an EV joke in there). In spite of what Elon Musk may think, third party dealerships are partners he should be embracing instead of demonizing.
Without him even realizing it, Tesla is letting himself be the guinea pig of the major auto manufacturers. EV have been around for over 100 years but, finally, someone has found a way to sell them. Enthusiasts aside, do you really think anyone will care whether this product is sold by GM or Toyota? No. Fact is, all the OEMs have to do now is just make a serious competitor to Tesla's flagship and the company may not be able to survive the competition. The distracting fight with dealerships can also only help the auto OEMs. If Tesla win, they can do the same. If Tesla loses, then it's business as usual. Either way, once the auto OEMs start taking the company seriously, Tesla will be done. They have the engineering and experience that Tesla simply lacks. Finally, like Apple, Tesla may have its own stores. But Musk needs to remember that Apple products can be purchased everywhere else. Tesla would be wise to rethink it's approach towards dealerships...
However, the aforementioned problems pale in comparison to Tesla's major problem: it's insistence that it run its own shops. This may create a larger margin (Tesla does not even offer discounts) and better customer service (maybe not, but at least they'd have more control over the narrative) but it leaves a lot of money on the table. Dealerships may not have the best reputations but what they do have is proximity to customers. Given the inherent limitation in Tesla vehicles, no one wants to drive hundreds of miles just to have the pleasure of being in a Tesla-owned dealership. What people do want is convenience and dealerships provide that. Third party dealerships also take part of the risk of expansion. This is great for a startup that cannot spend the capital in unfamiliar territories and it leaves headquarters to concentrate on how to make a great product. Finally, dealerships allow more people to test drive the vehicles. This is not possible when there are only like 3-4 Tesla-owned stores in New York state. The insistence on having your own stores limits Tesla's reach (there's an EV joke in there). In spite of what Elon Musk may think, third party dealerships are partners he should be embracing instead of demonizing.
Without him even realizing it, Tesla is letting himself be the guinea pig of the major auto manufacturers. EV have been around for over 100 years but, finally, someone has found a way to sell them. Enthusiasts aside, do you really think anyone will care whether this product is sold by GM or Toyota? No. Fact is, all the OEMs have to do now is just make a serious competitor to Tesla's flagship and the company may not be able to survive the competition. The distracting fight with dealerships can also only help the auto OEMs. If Tesla win, they can do the same. If Tesla loses, then it's business as usual. Either way, once the auto OEMs start taking the company seriously, Tesla will be done. They have the engineering and experience that Tesla simply lacks. Finally, like Apple, Tesla may have its own stores. But Musk needs to remember that Apple products can be purchased everywhere else. Tesla would be wise to rethink it's approach towards dealerships...
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