According to the outgoing CEO of the largest U.S. auto dealer chain, the actions of Tesla CEO Elon Musk are “almost unethical”.
AutoNation CEO Mike Jackson said in a television interview that the recent comment by Musk where he expressed optimism that Tesla would be able to acquire or possess all the features necessary for fully functional complete self-driving cars by the end of the year, is a seemingly impossible goal. No such bold predictions are being made by some of the other companies such as Waymo which are also developing autonomous driving technology.
“I think he is overpromising on autonomous vehicles in an almost unethical way,” Jackson said referring to Musk.
While being a long time critic of Tesla, Jackson has alleged that Musk makes use of “bait-and-switch” tactics on consumers and often makes pledges that cannot be kept by him later on. Jackson has also predicted that the business of Tesla would not be sustainable in the longer run.
The policy of Tesla to accept orders on the midsize Tesla Model 3 sedan was again criticised by Jackson during the interview. He said that there were some differences between what Tesla had initially said it would build – referring to the Model 3, and the ones that the company is now making. Despite initially advertising the Model 3 at a cost price of $35,000, Tesla so far has only sold the more expensive versions.
“There’s not another retailer in America that could get away with that bait and switch,” Jackson said. The starting price of the cheapest Model 3 is at $42,900 currently. According to explanations by Musk, the company has been forced to make the costlier versions of the Model 3 in order to retain high margins and has therefore not been able to live up to its pledge of low cost cars. There were more than 400,000 reservations for the Model 3 at one point in time.
The business model that Tesla follows does not include the traditional dealership model but is based on a direct purchase model and this gas drawn political and legal cases against Tesla in several states of the US.
Jackson made those comments about Musk after his company missed earnings estimates of investors by 4 cents – coming in at $1.10 a share. The company also formally announced the retirement of the long serving company boss Jackson in March. He would be succeeded by Carl Liebert on March 11.
The earnings report resulted in the shares of the company falling by 6 per cent while Tesla saw its shares increase by 1.2 per cent.
“It was a challenging quarter, no question,” Jackson said.
While the company faced a slowdown in sale in California, business was also impacted because of environmental issues in Texas and Florida.
“But even beyond those two explanations, I think retail automotive is getting more difficult,” Jackson said, attributing the challenges in part to the cyclical nature of the business.
(Adapted from CNBC.com)