Elon Musk is often compared to Steve Jobs and there are good reasons for that. First of all, Elon is also trying to change entire industries by himself such as space travel and automobile industry. He is also intensely focused on quality and customer experience which is one reason Tesla only allows customers to order cars online or through company-owned retail network and doesn’t employ independent dealers. Tesla’s aim may be to enhance customer service but it may benefit from a different distribution strategy that emphasizes sales volume.
Tesla’s fortunes depend on the embrace of electric cars in the U.S. and one of the hurdles is the cost of production. By employing independent dealers, Tesla will significant expand its reach and higher sales volume may enable the company to benefit from economies of scale and offer even lower-priced models. Tesla can ensure quality customer experience by requiring independent dealers to go through strict training program and continuously monitoring their performance. This will also allow Tesla to address legal barriers in certain states such as New Jersey that have banned Tesla to sell through company-owned stores as opposed to franchised dealers . Tesla’s goal is to convince customers to switch from gas-powered cars to electric cars and it cannot make serious inroads without huge volume.

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Tesla can even take lessons from Apple in this regard. Apple also focused on tight distribution of its products but now relies on third-party distributors including Wal-Mart and AT&T which has helped it achieve the huge market share in smart phone and tablet devices market that it enjoys today. Third party distributors will not only enable Tesla to significantly expand its reach but also do so at lower cost because it is expensive to develop your own distribution network.

Works Cited

  • Newman, Rick. One Foe Tesla can’t conquer: The lowly car dealer. 14 March 2014. 8 April 2015 <http://finance.yahoo.com/blogs/the-exchange/one-foe-tesla-can-t-conquer–the-lowly-car-dealer-185655051.html>