Tesla's Musk gears up for 'tough' battle over direct sales

SAN FRANCISCO Tue Jun 18, 2013 8:15pm EDT

1 of 2. Elon Musk, Chief Executive of Tesla Motors and SpaceX, smiles during the Reuters Global Technology Summit in San Francisco June 18, 2013.

Credit: Reuters/Stephen Lam

SAN FRANCISCO (Reuters) - Tesla Motor Inc (TSLA.O) is marshalling lawyers across the country to battle local interests such as auto dealers intent on outlawing its direct-to-consumer sales model, co-founder and CEO Elon Musk told Reuters on Tuesday.

The billionaire, who wants to sell direct to consumers but is facing strong opposition from local-level politicians and powerful auto dealerships, said Tesla will over the next few months begin a dialogue in several states with local politicians, who he said have close ties with auto dealers.

"It's a tough battle we face," he told the Reuters Global Technology Summit. "We don't necessarily have all the answers. I certainly believe that if we were to go through the regular franchise system that we would not succeed."

(For Reuters Insider video of the interview with Musk, click on reut.rs/11FigwN)

Tesla will demonstrate on Thursday a battery-replacement system that may underpin a nationwide network of fast-service swapping stations. Such a network would entail an investment of $50 million to $100 million, Musk said at the summit in San Francisco.

The idea behind that network is to speed up battery charging, which can take 20 to 40 minutes or even longer depending on what sort of device is used. He did not elaborate ahead of Thursday's announcement.

Musk's company sells the $70,000 Tesla luxury electric vehicle. Tesla's shares have almost tripled this year, a climb that accelerated after Tesla posted its first quarterly profit.

Follow Reuters Summits on Twitter @Reuters_Summits

(Reporting by Sarah McBride and Rory Carroll in San Francisco, Deepa Seetharaman in Detroit and Nichola Groom in Los Angeles; Editing by Phil Berlowitz)

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Comments (2)
orionsune wrote:
Unfortunately, Elon is facing one of the most dangerous and stubborn enemies known to our planet, ignorance. It’s quite comical from my point of view, you see I live in North Carolina where legislators are actively seeking to ban Elon’s direct sales to it’s residents under the guise that they are “protecting” the auto business from unfair competition. Ok, let’s take a look at the type of threat Tesla poses to NC auto dealers. Tesla sold 80 vehicles to NC residents in it’s lifespan of a company. How exactly are 80 sales a threat against a multi-trillion dollar auto industry? Yes I can see the potential for long term growth eventually drawing sales away from the old dealer model towards Elon’s direct to consumer model but in no way is this “unfair”, it’s simply humans evolving with technology and demands while innovating new systems and models to more effectively deliver said product, it’s called “progress”. So is it “unfair” competition to Food Lion or Kroger when I sale tomatoes and onions from my garden out of the back of my truck at the local farmer’s market or on the side of a public street? I’m bypassing the grocery store (dealer) and selling direct to the consumer (guy who stops to buy my produce) so Should I be thrown in jail for not first selling my produce to a “dealer” like “Food Lion” for them to sale to the consumer instead of me? Seriously, there are so many things wrong with this I just don’t know how to react. The number of ignorant people here in NC opposed to this simply regurgitating what our legislators are saying without any research for themselves is ridiculous. I feel like i’m living in the 1920′s here in this state.

Jun 19, 2013 11:50am EDT  --  Report as abuse
orionsune wrote:
Unfortunately, Elon is facing one of the most dangerous and stubborn enemies known to our planet, ignorance. It’s quite comical from my point of view, you see I live in North Carolina where legislators are actively seeking to ban Elon’s direct sales to it’s residents under the guise that they are “protecting” the auto business from unfair competition. Ok, let’s take a look at the type of threat Tesla poses to NC auto dealers. Tesla sold 80 vehicles to NC residents in it’s lifespan of a company. How exactly are 80 sales a threat against a multi-trillion dollar auto industry? Yes I can see the potential for long term growth eventually drawing sales away from the old dealer model towards Elon’s direct to consumer model but in no way is this “unfair”. The number of ignorant people here in NC opposed to this simply regurgitating what our legislators are saying without any research for themselves is ridiculous. I feel like i’m living in the 1920′s here in this state. It’s simply humans evolving with technology and demands while innovating new systems and models to more effectively deliver said product, it’s called “progress”. So is it “unfair” competition to Food Lion or Kroger when I sale tomatoes and onions from my garden out of the back of my truck at the local farmer’s market or on the side of a public street? I’m bypassing the grocery store (dealer) and selling direct to the consumer (guy who stops to buy my produce) so Should I be thrown in jail for not first selling my produce to a “dealer” like “Food Lion” for them to sale to the consumer instead of me? Seriously, there are so many things wrong with this I just don’t know how to react. One of the biggest mistakes people constantly make when knocking electric cars, is that even after considering the materials and emissions to create said electric car, there is still the efficiency factor no one seems to want to put out there. What I mean by that is, the efficiency in creating a gasoline car is roughly 45% efficient in using the materials and energy provided where as most electric cars are getting roughly 90% – 95% efficiency during manufacturing. It’s not really about creating emissions or using resources at all, it’s how smartly do we use what’s provided and gasoline cars only get around 45% efficiency during manufacturing and 55% efficiency in burning fossil fuels (45% of the energy during combustion is lost in the form of heat and exhaust gas) where electric cars efficiency is only subject to how much power you loose during charging which puts electric vehicles in the upper 90 percentile range. there is another factors people refuse to consider, that is maintenance. with a fully electric vehicle you no longer need to replace an air filter since there is no combustion chamber, no more tune-ups which usually include spark plugs, spark plug wires, and sometimes rotor buttons and rotor caps, a fuel filter, belts for the belt accessory system and any maintenance associated with belt driven accessories like water pump, air conditioning… these systems no longer exist on electric models, and reduced on hybrid models (for example the Prius still uses air filter, spark plug and plug wires but no longer has a belt driven accessory pulley system). I see lot’s of people trying to use everything that has a factor for determining emissions during manufacturing except the fact that electric cars don’t require these additional maintenance items to be replaced periodically. So can we please go back and revisit the math and include the emissions created when manufacturing air filters, spark plugs, wires, belts, etc along with your gasoline to electric comparisons on the environment. Of course not, it would make them wrong and that isn’t possible. We have to continue protecting the aging business model of our politicians illustrious friends who donate the max allowable from the automotive association and from each individual person within that group. We can continue placing checks and balances to prevent this kind of blind favoritism towards who ever has the most money but i’m afraid our politicians will continue finding ways to circumvent said checks and balances. Sigh, I weep for humanity.

Jun 19, 2013 1:34pm EDT  --  Report as abuse
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