Elon Musk gets emotional over dealers' "perversion of democracy"

[wtmusic]

Musk says the biggest difference between his position and the North American Dealers Association is that Tesla's philosophy is "it's terrible to make a profit on service".

Video of yesterday's shareholder meeting at link (see 52 min):

http://new.livestream.com/accounts/4186560/events/2144242/videos/20653712

[NYC_SKP]

1. Especially on an absolutely unnecessary service, like franchise mid-level car dealer.

Why not just work directly with the factory???

[cprise]

2. "it's terrible to make a profit on service"

...sounds hollow in the extreme. Fifteen years from now they will be charging customers up the wazoo for service. No mass market (Tesla's stated aim) business would pass up the opportunity to make money off service if they could so control their customers' decision on the matter.

If I were Musk, I would plainly state in the vehicle's warranty that the company is observing a moratorium on third-party service, and make it no more than 5 years. That way, they get some time in a controlled environment to get the whole picture as to how these electric cars fare in the real world, to improve the design, and to develop a whole service concept and curriculum to which they can later train 3rd party mechanics.

[wtmusic]

4. Wow, I thought I was cynical.

Musk has already redefined internet payment, electric vehicles, and launching payloads into earth orbit. I have no doubt he'll find plenty of customers who are willing to pay more for a car up front because their manufacturer stands behind his product.

"If you were Musk..." - good one. Have you launched any $multi-billion startups I might have heard of, or is your opinion "hollow in the extreme"?

[cprise]

6. Paypal is the only one that has been in business for a while

Is that company a good 'corporate citizen'? I think not.

"If you were Musk..." - good one. Have you launched any $multi-billion startups I might have heard of, or is your opinion "hollow in the extreme"?

Got any more logical fallacies?

I raised a question of business ethics. Screw your billionaire worship, and your (real) cynicism that implies mere plebes like myself cannot constructively criticize their business decisions.

[phantom power]

3. I don't think it's terrible to make a profit on service.

Now, I do think it's bullshit to tell a business they can't act as their own dealer for their product. But... I don't really have any philosophical problem at all with independent dealers. I'm highly suspicious of all of them, for being crooks, but I view that as totally orthogonal to whether or not they're decoupled from car manufacturers or not.

[wtmusic]

5. It's not terrible; it is a conflict of interest.

If Musk follows through on that principle he could turn the automotive business upside-down.

[cprise]

7. It's not a conflict of interest-- no way!

A person can normally go to another mechanic if they get the runaround from a dealer. They can get a second or third opinion before having work done. And they can educate themselves in ways that make a difference.

Tesla's service scheme traps you into dealing with only that one company if snafus or conflicts arise. The above factors are no longer barriers to negligence and misdeeds. The customer's only market recourse is to sell a car which couldn't be serviced satisfactorily (IOW, it will be a fire sale)... the buyer has succumbed to a lock-in mechanism.

I don't doubt that Musk himself will do good by his customers... but founders do not usually stay in control of large corporations. There is no reason to believe the usual corporate priorities won't kick in at some point; Even with a brand like Apple the rot is already evident.