Having come under criticism from dealers, Tesla co-founder and CEO Elon Musk has defended the company’s position on its Apple style retail strategy. In a blog entry this week, Musk wrote that Tesla “does not want to change the franchise system and has taken great care not to act in a manner contrary to those rules.”
Nevertheless, dealers in Massachusetts and New York filed a suit last week requiring Tesla to shut down its company owned retail stores, claiming they violate both consumer protection and state franchise laws.
Musk said that existing franchise dealers have a conflict of interest between EVs and conventional vehicles which still represent the bulk of their business. “It is impossible for them to explain the advantages of going electric without simultaneously undermining their business.” He also added that by locating Tesla retail stores in high traffic areas, such as shopping malls and creating a low pressure environment designed to educate consumers, the company is aiming to contact consumers before they make the decision to buy, in much the same way as Apple with its own retailers, or arguably as the web does for traditional automotive retailing.
As a result, Musk says that in terms of franchise laws or agreements, Tesla doesn’t directly compete against franchised dealers and as a result doesn’t violate any laws designed to protect them. He also says the company is actively investing in service centres and by the end of the year plans to have more of them in operation than retail outlets. “In order to accelerate the adoption of EVs, we must be able to create and execute a business model that allows us to advance the knowledge of EVs in a convenient, accessible, no-pressure environment,” he said.
