elon musk tesla

Is Tesla Considering Dealer Franchises?

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elon musk tesla

Tesla’s sales model does not involve traditional dealerships and has always focused on direct sales to consumers. This is because CEO Elon Musk has long insisted that the dealership model simply isn’t in the consumer’s best interest, but it’s possible that the Tesla sales model is about to change anyway.

This comes as various dealer associations in individual states are fighting to keep Tesla from breaking with tradition and bypassing the dealership model. In some states Tesla has won, but in others, laws have been enacted to keep them from doing business. Michigan Gov. Rick Snyder just signed a bill prohibiting direct-sales which basically bars Tesla from the entire state. This is a problem.

John McElroy of Autoline Daily spoke with Musk about possible changes to the current way of things, including a hybrid system that would involve both dealerships and Tesla owned stores. It’s not a matter of what the law allows, but of being able to provide sales and service to a growing customer base.

He asked if Musk felt that it was really possible to keep the current sales model unchanged and effectively sell and maintain the growing number of Teslas in consumer hands. Musk answered,

“We may need a hybrid system… with a combination of our own stores and some dealer franchises.”

This would be despite Musk’s insistence over the years that the dealership system is not the way to go, especially for EVs since dealers really have no reason to promote the technology over traditional gas engines. He really hasn’t changed his tune, but is simply acknowledging that the company’s growth might force them to change the way they do business.

The idea with direct sales is that it provides a better experience for customers, but if people can’t get the cars they want in their state, and worse if they can’t get them serviced, then things need to change. In the interest of providing the best service possible, Tesla may end up choosing to have dealerships all on their own.