Tesla Motors, which wants to expand its retail presence in Virginia, is more than a manufacturer of high-end electric vehicles. It’s part of Elon Musk’s quest to transform the electric grid.
by James A. Bacon
Richmond businessman Stuart Siegel loves his Tesla Model X. The SUV is loaded with luxury options and its electric motor is as quiet as a mouse. After he recharges his car battery at night, the car holds enough juice to run 280 miles more than enough for daily needs rarely exceeding 50 miles. If he ever wanted to drive to Maine or Florida, he says, the car monitor shows the location of hundreds of Tesla recharging stations around the country. Twenty minutes with a supercharger — not much longer than it takes to grab a coffee or take-out at a nearby restaurant– gives him enough power to drive another 175 miles.
Selling luxury electric vehicles is not the only thing that endears Tesla to Siegel. The company is redefining how an automobile manufacturer sells and services cars. Unlike traditional manufacturers, who work through auto dealer franchises, Tesla controls the customer experience from start to finish.
When ordering his Model X, Siegel went online to pick all the options — color, interior, wheels, seating configuration, size of battery. A few m0nths later, Tesla delivered a vehicle to Tesla’s retail outlet in Tysons, manufactured to his exact specifications. He couldn’t get that degree of customization with any other car, he says.
If the car needs maintenance, Siegel doesn’t go to Tesla, Tesla comes to him. When he had a problem with a door latch, the company dispatched a “ranger” from the Washington area to his house in Richmond. “This guy showed up in a white van,” he recalls. “Everything he needed to fix a car was in that van. He put on a new latch, and an hour later he was gone.”
Tesla also provides tech support. When he picked up his Tesla X at the Tysons sales center, a delivery specialist spent two hours showing him how to drive the car, Siegel says. “He took me through everything. He gave me his card.” One day, when the car monitor went dark, Siegel called a tech support number. The technician told him exactly what to do, and the monitor came right back on. “I love the car. It’s unlike any other I’ve ever owned.”
As Tesla expands its product offering from the sporty Tesla S sedan ($85,700 sticker price) and Tesla X utility vehicle ($106,200 sticker price) to electric vehicles in the $35,000 range, it needs to ramp up its retail footprint. Due to the unique nature of how it interacts with customers, however, the company is unwilling to outsource the relationship to independent auto dealerships.
Tesla’s corporate philosophy has caused a rift with the Virginia Automobile Dealers Association (VADA), which maintains the company should abide by the same automobile-franchise and consumer-protection laws as every other auto manufacturer. After negotiating a deal that allowed the company to set up a retail outlet in Tysons two years ago, Tesla now wants to add one in the Richmond area.
Following lengthy hearings, a Department of Motor Vehicles hearing examiner recommended yesterday rejection of Tesla’s request. Tesla had argued that there are no independent automobile dealers in the Richmond area capable of profitably selling its cars. But at least 11 dealers had expressed an interest to sell and service Tesla’s cars, noted examiner Daniel P. Small. The case goes to DMV Commissioner Richard Holcomb for a final decision.
Holcomb’s decision, driven by a consideration of Virginia’s auto dealership laws, could have profound implications for the future of Virginia’s electric grid. Tesla is but one component of a larger vision by California entrepreneur Elon Musk to move the world toward a more environmentally sustainable economy.
In Musk’s view, selling more electric vehicles helps the world by cutting gasoline combustion and the carbon dioxide emissions implicated in global warming. But EVs need electricity, most of which comes from burning fossil fuels. So Musk has announced his intention to merge Tesla Motors, his EV company, with SolarCity, another company he has founded, creating what he calls “the world’s only vertically integrated sustainable energy company.” His ultimate goal is to make solar the primary energy source for the electric grid, using Tesla’s battery technology to store excess electricity produced during peak sunlight hours for use during periods of peak demand later in the day.
While the three main components of Musk’s empire — generation, storage, EVs — can work independently of one another, Diarmuid O’Connell, Tesla’s vice president of corporate development told Bacon’s Rebellion, “It’s best if they all work together.”
A Tesla outlet for selling EVs eventually will become “a single retail touch-point for the customer,” O’Connell says. “We’re trying to pull the pieces together with one offering in the market. The best possible case in Virginia is to modify our existing retail footprint so we can offer the full package” — electric vehicles, solar panels and energy storage.