Tesla CEO Wants Direct Sales Model to Help His Electric Car Company Grow

CEO Elon Musk of Tesla Motors
CEO Elon Musk of Tesla Motors

Saying that the traditional model for car sales and distribution in America is hindering his company’s ability to grow, Elon Musk, chief executive of the electric car manufacturer Tesla Motors Inc, addressed his firm’s annual meeting this week.

“The auto dealers association is definitely creating some problems for us, making it harder to get things done,” Musk said.

Tesla was launched ten years ago and has been steadily gaining momentum as they posted a quarterly profit for the first time in their history last month. Other good news came when their Model S electric sedan received an almost perfect rating from the popular and influential Consumer Reports magazine.

These pieces of good tidings helped Tesla’s shares to triple in value during the past year. At the meeting, which took place in Mountain View, California, Musk said that he expected the company’s gross margins to come close to those of the famous sports-car maker Porsche AG, “over time.”

But Musk insists that Tesla needs to break away from the independent car dealer model in order to boost sales. He would like to see his company conducting direct sales to consumers, eliminating the middleman dealerships. Tesla is hoping to see 50 stores selling his cars this coming year, up from 34 which existed at the end of last quarter.

Musk pointed to the fact that consumers have shown support for the direct-to-consumer sales model as a reason to push for such a practice. He also said that the dealer model for selling cars, which has been practiced in the US for almost 100 years, has been a failure for other start-ups in the car industry, such as Fisker Automotive and Coda Holdings. Coda was forced to file for bankruptcy protection last month.

“It didn’t work for Fisker, didn’t work for Coda. In the last 90 years, when did it work?”

Musk said at the meeting, which was also broadcast online. “We have to do this directly.”

Amelia Jacobs

About Amelia Jacobs

Amelia Jacobs began her career in business following a surprisingly successful trip to China. Having visited the region as a tourist, she returned to America as an import-exporter. Today, Jacobs runs a thriving import-export company, splitting her time between Chicago and Shanghai. Contact Amelia at amelia[at]businessdistrict.com