Letter to the Editor: Tesla should be embraced, not feared in Indiana – Indianapolis Star

Paul Mitchell headshot 4-21-14ESN President and CEO Paul Mitchell penned a letter to the editor in response to House Bill 1254, a bill that would ultimately prevent Tesla from selling its vehicles directly to consumers and require a dealership approach. Mitchell’s letter to the editor ran in the Indianapolis Star on Sunday, February 28 and can be viewed here.

Tesla should be embraced, not feared in Indiana

In the early 1990s, upstart computer maker Apple struggled to make sales in part because it relied on big-box retailers to sell their products for them. In 1997, Apple launched an innovative and risky business model of selling its products directly to consumers, first with an online store and then opening freestanding stores in 2001. This step was questioned and even attacked by some other computer manufacturers at the time that saw the steps as irrational and risky as it would turn Apple, a technology manufacturer, into a retailer. Today, Apple is the largest and most profitable company in the world, and their stores blow all other retailers away. Its sales per square foot are more than $1,600 higher than runner-up, Tiffany & Co., and more than four times that of top big-box retailer Costco. What Apple proved is that innovation is not simply about having the best technology; it requires creating new and often disruptive business models to get desirable products into the hands of customers by creating a unique consumer experience.

Today, there is a new upstart technology company that is similarly trying to find the most innovative way to introduce their products and reach consumers. Tesla Motor Co., an electric-vehicle manufacturer, has also chosen a direct-to-consumer sales approach, using an online store and limited small retail showrooms to manage their supply chain and create a unique consumer experience. Tesla builds their cars on demand, meaning they are ordered online or at the retail store and then delivered to your home at a later date. Each car is customized, so there are few cars to park on a lot.

Tesla doesn’t only sell its cars online; they also handle nearly all the checkups, repairs and updates with downloads over-the-air to your car, similar to cellphone updates. The fact that these cars are all-electric means they don’t require oil changes, and their regenerative braking allows most drivers to get more than 100,000 miles before brakes need service. In other words, these advanced technologies mean Tesla’s vehicles don’t require regular visits to a dealer’s service center.

While companies like Apple and Tesla can be disruptive to traditional business models, they are nothing to be feared. In fact, these are the very companies that give America the most entrepreneurial, innovative and free-market economy in the world. I should note that Tesla makes 100 percent of its cars here in the U.S., and are even building a new multibillion-dollar battery factory in Nevada. As they succeed and need to expand production, I hope they will consider Indiana — the No. 1 manufacturing state in the nation — as a new home.

If the Indiana General Assembly were to pass House Bill 1254 this session or a similar bill in any future session, I can assure you it would not slow down the rapid growth in demand for Tesla’s products around the world. But it would likely ensure that Indiana will not benefit from that growth as a future home for manufacturing to Tesla, or any other direct-to-consumer automotive company that may come along.