It's hard to tell from week to week whether Tesla Inc. is on the brink of turning the automotive world upside down or on the brink of collapse.
But we should be prepared for the possibility that both can be true.
On one hand, the Model 3 is not only rolling off the assembly line in large numbers, but has zoomed up the sales charts to become one of the best-selling luxury vehicles in the U.S. last year, based on estimates by the Automotive News Data Center.
On the other hand, Tesla this month decided abruptly to shutter its retail outlets as a cost-saving move and had to scoop $920 million out of its meager cash pile to meet a bond payment deadline. As usual, Tesla was ready with product announcements to distract us from its trouble with the Securities and Exchange Commission and its forecast of an unprofitable first quarter.
But while they rummage through the sofa cushions, count on those rebels at Tesla to also raise some rather thorny questions for the legacy auto industry, just as they did with the Model S.
Questions such as: If Tesla can sell exclusively online, why can't everyone?
The answer, of course, is the thicket of state franchise laws that set automobiles apart from most other commodities, rules that Tesla has continually had to tiptoe around. While these rules hamper innovation in retailing, they exist for good reason, and we fully expect the dealer lobby to defend them in the name of consumer protection.
But out of curiosity at least, automakers and retailers everywhere should look at Tesla's sales model — if it survives — as a test case of how consumers would respond if they were really given a choice of how to buy a vehicle. We know already that many shoppers prefer to begin their journeys online. But once they get serious, it seems, they become a "lead," bombarded with form emails, beseeched to visit the store and tugged at in a crass game of steal the bacon.
The consumer deserves a more dignified online experience, and for all its efforts, the franchised dealer system hasn't delivered it yet. If Tesla can build a consumer market for electric cars from scratch, and spark a round of industrywide innovation in EVs, we wouldn't be so quick to conclude that it can't do something similar for online automotive retailing.