These dealer groups are family owned, likely for generations. Their connections are vast and their pockets are deep. It's a battle that can't be won by anyone, even Musk.
The only reason Tesla showrooms have survived to this point is because Musk had yet to prove the concept. It's proven now. Folks who can afford the Model S love it. It's a threat. You take threats out before they take you out. Such is the Jersey way and others will follow suit.
Could Tesla adopt a dealer model? Sure. There's just one catch. You need inventory to have a dealer. Tesla currently has one model. Imagine your local Ford dealer selling only the Fusion. Not a lot to discuss or haggle over right? Any used models around? Nope. It won't work.
A safe estimate to open a Tesla dealership with one model is probably in the range of $10 million when considering real estate acquisition, overhead and inventory.
Do you know a lot of people ready to invest $10 million looking for a 1%-3% return? Car sales is a volume business and there's not enough volume in Teslas to make it worthwhile. Period.
However, if Tesla is a growth technology stock that may redefine the electrical grid in the country, there's really no price not worth paying. But are you convinced of that?
If indeed Tesla is merely a car manufacturer, well, buckle up because it's about to become a real bumpy ride.
At the time of publication the author is long F.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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