Tesla Motors (NASDAQ:TSLA) co-founder and CEO Elon Musk talked tonight about the company's fight to sell cars directly to its customers, and how national auto dealership groups are trying to keep them from doing that.
At Tesla's annual shareholders' meeting tonight, Musk said, "The automobile association is definitely creating some problems for us, making it harder to get things done." He said auto dealers talk about offering Tesla a franchise to sell its vehicles, but that nowhere in the past nine decades has that worked out for a start-up car company. "In the last 90 years, when did it work?" he asked. "There are no good examples."
Tesla wants to sell its vehicles directly to consumers, which goes against some states' legislation. The company has put up a public fight in several states over the issue. Musk said one of the main problems was that large national dealerships make their profits from services and that Tesla wouldn't be doing that. "Our philosophy in respect to service is not to make a profit on service," he said. "It's terrible to make a profit on service."
Musk said opinion polls overwhelmingly show that customers prefer direct sales, but that large national dealerships were influencing state legislation. The Tesla co-founder said dealership associations were bragging about stopping the company in Texas, North Carolina, and Virginia.
"I think it's outrageous that they would crow about a perversion of democracy," a visibly upset Musk said. "That's just wrong. I think they're making a big mistake."
Musk went on to say that eventually customers will revolt.
Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.