Auto Dealers' Fight Against Tesla Stores: Elon Musk Weighs In Page 2

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Tesla Motors gallery in Houston Galleria, opened October 2011, with Model S on display

Tesla Motors gallery in Houston Galleria, opened October 2011, with Model S on display

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First, he said, independent dealerships usually continue in business to provide service even if an auto company or brand shuts down the supply of new cars.

If Tesla were to fail, he pointed out, it would close all its company-owned stores and service facilities, leaving Tesla owners without recourse.

Owners of Oldsmobiles, Pontiacs, HUMMERs, Saabs, Daewoos, Isuzus, and other vanished makes got varying access to service and parts through independent dealerships long after they disappeared from the market, he maintained.

Second, the dealers feel--as Musk acknowledged in his letter--that Tesla could spend its money much more wisely than on building its own stores.

Imagine, Jackson suggested, what Tesla could do if it applied the money it's now spending on stores and service centers to its product development plans instead.

And third, he argued, all auto dealers will be hurt if Tesla fails.

If that were to happen, and consumers were left high and dry without a place to have their Tesla cars serviced, he said, it would do great damage to the good reputation of all auto dealers.

Jackson acknowledged that most car buyers have no idea automakers are legally forbidden from selling cars to them directly.

He reiterated the association's position that the public is best protected by having independently owned dealerships, rather than direct sales by carmakers.

Like Apple, like Tesla

The model for the Tesla Stores is none other than Apple's outrageously successful chain of retail shops. In fact, both companies' stores have been designed by the same man, George Blankenship.

"The [traditional] model is that [carmakers] do a bunch of research, hold a bunch of focus groups, and they decide that this is a car we should build," Blankenship said at the July opening of the Portland store.

"They design that car, they engineer it and manufacture it, and then they sell it to some dealer who then tries to sell it."

"That’s just not how we’re doing it."

Meanwhile, Tesla has said it had already logged more than 1 million visitors in its various stores by mid-July.

And the company is moving forward with plans to open 10 more stores in high-end locations by the end of this year.

Heading into January, Musk wrote, Tesla will have 19 stores, three galleries, and 26 service centers in the U.S.--including service centers in cities where it has no showrooms.

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