AutoNation CEO Supports Tesla Motors’ Direct-Sales Business Model

Tesla stockBlomst / Pixabay

Tesla Motors Inc (NASDAQ:TSLA) has been actively fighting for its right to sell its electric cars directly to consumers instead of going through car dealerships across the United States. A majority of car dealerships are against the direct-sales business model of the electric car manufacturer and they are pushing for legislation to compel it to sell its vehicles through traditional franchised dealers.

Mike Jackson, the chief executive officer of AutoNation, Inc. (NYSE:AN), the largest automotive retailer in the United States expressed his support for the direct-sales business model of Tesla Motors Inc (NASDAQ:TSLA) and opined that prohibiting the company from doing its business the way it wants will result to huge consequences that could ultimately come back to bite the feet-dragging dealers.

Blocking Tesla’ direct sales could hurt auto dealers

Jackson warned that some of the attempts of dealerships to stop Tesla Motors Inc (NASDAQ:TSLA) from selling its electric cars directly to consumers will only end up hurting instead of helping the existing auto dealers. Currently, the states of Arizona, New Jersey and Texas have rules prohibiting the electric car manufacturer from directly selling its vehicles.

As an example, Jackson pointed out that the planned Gigafactory of Tesla Motors Inc (NASDAQ:TSLA) is an example of an unintended consequence. He said, “You want to talk about unintended consequences. You pick a fight with Tesla. Now they build a big battery factory. What are you going to do?”

Change of heart

He noted the change of heart of the states when Tesla Motors Inc (NASDAQ:TSLA) announced its plan to build its $5 billion Gigafactory, which is expected to create 6,500 jobs. The state of New Jersey is considering the possibility of providing a temporary permit for the electric car manufacturer to directly sell to consumers until it reach the threshold of 4% of the total auto sales.

Last week, Tesla Motors Inc (NASDAQ:TSLA) and New York Governor Andrew Cuomo signed an agreement allowing the electric car manufacturer to maintain its five stores, but it will no longer expand its operations in the state.

Tesla Motors Inc (NASDAQ:TSLA) is considering building its Gigafactory in Arizona, New Mexico, Nevada, and Texas.  Despite oppositions from car dealerships, legislators in Arizona and Texas are considering a bill to allow the electric car manufacturer’s direct sales business model.

Observers in the auto industry believe that Jackson supports Tesla Motors Inc (NASDAQ:TSLA) because he understands that its business model is important and revolutionary and any business will remain successful if it has flexibility and ability to change.

AutoNation, Inc. (NYSE:AN) does not consider Tesla Motors Inc (NASDAQ:TSLA) a competitor, instead it represents a blueprint for a future business model.

About the Author

Marie Cabural
Marie received her Bachelors Degree in Mass Communication from New Era University. She is a former news writer and program producer for Nation Broadcasting Corporation (NBC-DZAR 1026), a nationwide AM radio station. She was also involved in events management. Marie was also a former Young Ambassador of Goodwill during the 26th Ship for Southeast Asian Youth Program (SSEAYP). She loves to read, travel and take photographs. She considers gardening a therapy.