Tesla May Be Doing Something Smart
I still think that TSLA the stock is ultimately worthless because I think the company goes bankrupt as they find out they can't get enough scale to be profitable, but that's not what I'm interested in today.
The smart thing that Tesla is doing is cutting out the dealership network altogether. They have no dealers, only showrooms. To buy a vehicle, you have to buy it directly from the factory. And I think this is smart. Why?
The dealership networks grew up around the automakers somewhat randomly. The body of custom and law largely favors the dealers over the customers and is a large part of what makes buying a car really annoying. It also induces a lot of friction costs (mostly in time and aggravation) that other industries manage to avoid. (Suppose you had to go haggle for hours just to buy a freaking laptop?)
Now as I've mentioned before, a change in distribution channel oftens heralds a shakeup in the structure of an industry and can help or hurt players in that industry. The travel agent industry got decimated by the internet. But it made Amazon one heck of a player in the book and drygoods business.Could something similar happen in the auto industry?
Musk is a smart guy and I wish that he'd concentrated on Spacex and ignored this electric car nonsense. But this may be an innovation that one of the bigger manufacturers starts using and that could change the industry. And change can be profitable.