Elon Musk, known for living on the edge, may just have made his riskiest bet yet.
The Tesla CEO announced that the car company is moving all its sales online.
It's news that makes me wonder if he has been smoking something.
The online sales gamble is part of Musk's effort to cut costs so he can deliver on his previously elusive and long-delayed promise of a $35,000 Model 3 and redirect resources to Tesla's troubled service centers. Service complaints are one of the nagging problems that exacerbate growing concerns about Tesla quality, as well as the company's path to profitability.
The announcement also is an implicit acknowledgement that Tesla's rejection of the dealer franchise model in favor of factory-direct sales has come with very real costs.
As Amazon's growth and the struggles of other brick-and-mortar retailers show, Americans love the convenience of online shopping — at least when it comes to buying books or household goods. (Ironically, Musk's online sales announcement coincided with the news that Amazon was planning to open dozens of brick-and-mortar grocery stores, beyond its Whole Foods chain.)
Buying a car is of course completely different from buying something that can be carried to your doorstep in a box.
For most people, a vehicle is one of the most expensive items they'll ever buy, eclipsed only by a home.
For consumers, it's also intensely personal. They want to kick the tires — some still do so literally — and go for a test drive. They want to browse the selection available on the lot. They want to touch the vehicles, smell them, sit in them, experience them firsthand.
Even today's young digital natives understand that some things are better in real life.
Consumers also typically have a trade-in vehicle, so they want to bring that to a dealership to get a sense of its value, and explore solutions to their unique financing needs at the same time.
And in most cases, after a careful inspection, consumers want to pick from the on-site inventory and drive their selection off the lot.