* Tesla wants to sell directly to consumers
* Is facing strong opposition from local politicians,
* Battery-swap system to require $50-$100 mln investment
By Sarah McBride, Deepa Seetharaman and Rory Carroll
SAN FRANCISCO, June 18 Tesla Motor Inc
is marshalling lawyers across the country to prepare for a
"multi-front war" against local laws that risk stalling the
electric vehicle maker's plan to bypass dealerships and sell
directly to consumers.
Chief Executive Elon Musk told Reuters the company is facing
strong opposition from local politicians and the powerful auto
dealerships that bankroll their campaigns.
Over the next few months, Tesla will also bulk up its
business development team, which has been charged with starting
a dialogue with local politicians in several states, and Musk
said he will personally devote more time to this issue.
"It's a tough battle we face," the billionaire told the
Reuters Global Technology Summit on Tuesday. "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
(To watch the entire Musk interview, click on reut.rs/11FigwN)
The push for direct-to-consumer sales is part of Musk's
broader strategy to combat concerns over electric cars' price,
power and range. It's also critical for Tesla to reach more
consumers when its new, lower-priced sedan hits the market in
Musk also said a new battery-replacement system that will
underpin a nationwide network of fast-service swapping stations,
would entail an investment of $50 million to $100 million.
It takes less than five minutes to swap the battery pack,
compared to at least 20 minutes needed to do a quick charge,
Musk said. Tesla will demonstrate the system on Thursday.
Musk added that Tesla's technology would allow it to avoid
the outcome of Better Place, an electric vehicle charging
company founded by Shai Agassi that liquidated last month.
"Shai was very good at marketing but not so good at
technology, so he didn't quite get it right on the pack swap
thing," Musk said. "As long as you have the right mechanical
device you can do a battery pack swap."
Tesla will first test the swap program in high-traffic
corridors between Los Angeles and San Francisco as well in the
Washington-New York-Boston region.
Larry Dominique, president of auto consulting firm ALG, said
said the battery swapping strategy would allow Tesla to preserve
the resale value of its Model S sedan, which sells for $70,000
before a federal tax credit.
"The challenge is going to be infrastructure," said
Dominique, also a former vice president of product planning for
Nissan Motor Co's North American operations. "If I've got to go
20 miles out of the way, that defeats the purpose."
So far, investors have embraced the company's strategy and
Tesla shares have nearly tripled this year.
Tesla is now beefing up its sales operations in anticipation
of growing Model S sales. The company expects to have 50 stores
by the end of the year, up from 34 during the first quarter.
But on the state and local level, Tesla efforts to sell cars
directly to consumers have been stymied by auto dealers that
account for a sizable portion of tax revenue in many states.
In 2010, auto dealers paid a total $458 million in corporate
income taxes and license fees to states, compared to $296
million for automakers and parts suppliers, according to a 2012
report from the Center for Automotive Research.
Musk said there is less incentive for sales people to push
electric cars on buyers since they don't require as much
servicing, a key revenue stream for dealers.
"It's harder to sell and then they make less money on
service, so for sure we would be the last thing they would
sell," he said.
Tesla faces stiff dealer opposition in North Carolina as
well as Massachusetts, New York, Colorado, Virgina and Texas.
"We need to apply more resources to this because we're
finding that it's a multi-front war," Musk said. "They outnumber
us at least 10 to 1, maybe 20 or 30 to 1.
He added: "At the state level, very often, the car dealers
are the biggest funders of local state politics. That's been a
problem for us obviously."
(Editing by Phil Berlowitz and Edwina Gibbs)