Arizona, texas, virginia, maryland, and most recently, my own state and new jersey. Pending restrictions and others. Bloombergs matt miller breaks down the numbers. Can go for ae dealership when theyre shopping for a new car. When you go to tesla, when you want a tesla, you go to the mall. The tesla store in westchester sit between two we are. Two retailers. Theyve done their research. We also have folks who are shopping at nordstrom ticking of a new handbag that are not as familiar. The real reason tesla has shut set up shop at the mall would be a it would be expensive to build a National Chain of dealerships. Just like a dealership, you can take a test drive in what is likely to be a sixfigure purchase. We will go out that exit. You get to drive them on the open road. Class that is insane. Class of is like a spaceship here there is no sound. I am super impressed with the pickup example. I want one. Class then it was back to the store to configure my dream tesla. Class you wanted to max out yours. You have a button for that. Everything included. Class it cost just short of 130,000. It is a little out of my budget but next time i get a raise, i will be back. Takes is about two or three months to custom build a car. Most people design it in the store and then go to a service center. What is nice is we have folks blocking it through the car, how to clean it. I think you hate owing to the mall, you can even use paypal to pay for it. Account. S a big paypal matt miller joining me for the hour. Thank you. Did you see anybody buying a tesla . Class i saw people milling around, i saw people talking to the sales staff, but i did not see anyone plunking down 100 grand on the spot. You might not see someone doing that because you can do it on the internet. Paypal, you can use at least for bitcoin, you could definitely use. We know people have taught teslas in the past. At home. Ould do it people go into the dealership and talked to the people there and then i tend to mull over a car purchase for a good six months to a year. When theyre finally ready to pull the trigger, they can do it online. What is the disadvantage to this motto . You have to wait. You will not just go out and point to a car and drive it home. A lot of people say, it is convenient and you can come in and leave with the car the same day. The average transaction takes 6. 5 hours. That did not take 6. 5 hours. Luxury buyers are used to buying cars. They have exclusive Premium Options and tesla fits that model permanently. It is a much simpler process for most buyers. Class given the Consumer Satisfaction for auto dealers, are you surprised it took this muskfor someone like elon to come along . Unless you are a small independent making weird cars like teslas, or german. The first car i ever bought was direct from audi in germany. I did not have a dealer and there was no middle man no haggling over the price. I went to audi and got it. In the u. S. , you have a situation number one, i do not think the big Auto Companies want to be dealers. That is not the business they are in. Focusedet someone very on one main goal, they do not want a conglomerate. Most carmakers in the other part of the world do. Musk aoke with elon while ago and here is what he said to me about why the dealers do not want him selling directly to consumers. In this case, theyre not doing that because they are such huge contributors to the Political Campaign on the local level. He is advocating for the average consumer. You had a Heated Exchange with one of the representatives of the new jersey dealers. I did. I got to talk during your show yesterday with jim appleton, the head of the new jersey dealership group, the new Jersey Coalition of automotive retailers. Of the franchise. Listen to what he had to say. The Consumer Protection statutes are on the book to make sure they do not control the safety recall process. There is an independent auto foriler who is an advocate the consumer. I get what youre saying. Look at what happened with general motors. They drag their feet for a decade. Class 12 years. 30 people died. Think about this. Perfect. M is not with gm, it was far from perfect. You do not change the system because it is not perfect to make it worse, which is what the tesla Business Model does. It up litter rates price competition. One choice, buy from the main factor. There is no competition interbrand. It places the fox squarely in. Harge of the chicken coop you do not want the manufacturer to be in control of the system. Class look, i do not think anyone watching with think the retailer did anything that was really helpful in the gm situation. It was 12 years. 13 people died. 12 years later you obviously do not understand how the recall process works. Let me ask you something else. Let me ask you about tesla. I am not a baby. I can read. I can join the army. I can jacob year. Why can i not decide if i want to buy a car my own . Why do i need a nannys day assigning franchisees to make money on my choices. I do not need a middleman. This is not a nanny state. We do not allow people to sell securities or real estate ishout a license. All that being required of tesla is to submit to the licensing requirements of the state of new jersey. As far as the warrantee and say retail, we believe that is the value added in the auto retailer and that has to be protected in our state. Pointing out that story with elon musk, some of the auto me, thesaid the same to service part of the whole equation, you cannot get that with a direct consumer model. I do not think that is entirely true. Tesla has a great system and if you have a problem, they know about it when you do. I had a a guy had a charging problem and could not charge his vehicle and could not drive it so they sent someone to minnesota to help them out. For tesla, it works. You can only do that if youre selling thousands of ours and not millions of cars. If that is what tesla is doing. Selling 30,000 cars a year. It is applicable for them and keep in mind, it is a very different product. There is not much to break on a tesla. There is not much that can really happen to a tesla driver. I do not think any driver has been killed in an accident with tesla. Other than dealing with the battery and the charging system, it is not like a car, where you can have so many different parts and it can go wrong. The fact that they are only selling thousands, i think elon musk would like to sell more about that more than that. Why are they so riled up . The dealers are in a classic struggle with a lot of lyrical power and no support. Tesla has a lot of cloud amongst people a lot of public support and very little power. If he is able to overcome the political part, they have lost their power in the political structure struggle. They went statebystate because they cannot not get a National Consensus for what they want to do. Washington just signed a law saying tesla could sell directly so they can open a store there. Tesla wants a giga factory. In new jersey, it will be a long time. Certain states will be tough. Placesd more, in urban really improves your experience in buying a car, they will survive here there is a reason for them to be there and they will want to go. It is a deal that does not add anything. The whole haggling process, the idea that they offer price, consumers do not want that. You do not want to go to try to figure out if you will get a good price or a bad price. I buy an iphone, i pay the same as you. Class for consumers, the complaint is more that they feel add on morers hidden fees in some cases that they do not know about. Class that does happen. Gm is doing a really good job of this with dealers. They have been trying to purge bad dealers. Make them more competitive. You still have dealers where and have been there forever keep others out of the market and have done nothing but a bad job. Those will hopefully go away. And you have automakers. Do you really want to sell directly to consumers . I think they do not want to add another layer. It is a lot of money and hassle. They a lot of the business are not in. General motors wants to focus on building cars and do not want to do with all of this stuff. They love franchisees. Especially countries like toyota. They adore and it is a huge help to their business. There is a partner that does them good. Dealers add a lot of value for a lot of people in this equation. Not always for the consumer. Hang on. Still ahead, we will hear directly from tesla. The companys head of divisive of Business Development will be joining us. Automotive retailer in the u. S. Will join up in a few moments to talk about tesla and whether he wants to sell those cars as well. They reported their results this morning. Stay in the loop. As we continue our special, were back with our resident auto expert, matt miller. Also, my cohost for this hour. As well is allen, normally based out on the west coast but he is here in new york for the auto show. You met with tesla last night. By phone. You . T did they say to class they are upset with the way things turned last week. You talked about new jersey today but there was another issue in arizona where they thought ability go their way in the state legislature that failed on friday. It was a setback. A setback because of this giga factory plan. It might be based in arizona. That is one of the four states they have identify theyre looking at. There is also texas, which bans direct sales. Texas and nevada did do not. Pointsrhaps puts a few in their corner. In terms of what happens in their new jersey stores, they basically turned into galleries or showrooms. It is not as if they are shut down. What happened to their sales . Is anything going to happen . Class they have been able to figure out workarounds. You want to see the car, you go to the gallery. You can discuss price. They will go they will take you to the website. I heard they are giving tors. Essentially, you will order your vehicle and what happened in other states, and taxes would be a good example, you order your vehicle and it may get dropped off at a Texas Service center and someone might let you know that could be there for pickup and arrives with california ties and it would have to be registered. Right now, new jersey is a decent state for them. They did about 500 or so units last year. Not theirnothing, but biggest state. There are workarounds. Matt, you were talking about how tesla does not have the legal power now. Is oneole giga factory lever he can poll. Thousands of jobs and so much money. Putting the state on a footing toward advanced technology. Rick perry is not running for reelection. He said he wanted up to the idea of letting tesla do what it wants. Legislatorsstep. Were apparently meeting in secret with some text tesla folks because they would love to play in san antonio. The university of nevada was very friendly to it. All the states, i think nevada is the most likely and has the best lyrical set up for tesla right now. They have a rail line that leans directly to the factory. There is a huge pole there. It is also for solar power, the biggest state. Texas, he do better with wind. Factory plan is huge. Thatllion and 6000 jobs will be created. Elon does so many things. Is it even possible . There is more than a little skepticism. The critical factor is they have got to get a major sell supplier to go in on the plan with them. Like panasonic. Far, they have not publicly said anything positive. Yuan has said several times he is full full they will. They are the primary supplier. The challenge for tesla is they do not control the supply base. They have got to have a panasonic great to see you here. Matt miller is staying with me as well. In two, we will be back minutes. Meanwhile, tweet me and let me know what you make of elon musk and teslas dealer disruption. Stay in the loop. Welcome back. Ton musk once you to be able buy a model s the way you buy an iphone. You could buy it online through a thirdparty or directly in the apple store. There are rules governing governing franchise dealers that go back a decade. We will talk about an automotive dealer in the u. S. Who will join us and talk about his company to buy a model s theearnings. It is 26 minutes past the hour. We are on the markets. Olivia sterns has your look at the early trade. Futures are pointing to a higher open. Equity markets will decline. They already posted the biggest threeday rally so far this week and months. In just a few minutes, we will get weekly jobless claims at 350,000. Come in last week was the lowest level since 2007. We also heard from Morgan Stanley and Goldman Sachs beating earnings estimates. We will be on the marked again in 30 minutes. Thank you. Retailerst automotive in the u. S. Just reported record firstquarter earnings per share for continued operations. Its 14th straight quarter for growth. Premium luxury business sells audis, like mercedes, all of those that compete with the model s. Mike jackson from autonation joining us now. Know you want to talk about your earnings and your business, but i have to ask you about tesla. Add a model s to to your lineup . Of course we would. As far as the controversy over i am atribution model, Free Enterprise guy and there are no existing tesla dealers to be harmed. If you want to launch with a direct model, this is america and he should have the right to do that. I do not think that is a threat to existing franchises. I believe also when he wants to higher volume, he will ultimately return to the Franchise System but he should sell his cart to as he sees fit. Most agree with me. He has been selling in states like california and florida for years with no controversy. It is only a few militant states that have strong feelings and i find Common GroundGoing Forward. Most dealers i have spoken with, especially done in texas, a lot of people have been speaking in the last few months about car sales. They have been saying it is too is the winter months. No one wants to buy a car. We have seen a turnaround in march. Do you think the last three months the slowdown in sales was purely weatherrelated . Basically, i hate talking about whether and business in the same sentence, but it surely was an epic winter and no question, the customer went into hibernation. We were beginning to wonder if they were ever going to come out. Lo and behold, the last few weeks in march, this all came and our showrooms were bursting with activity. Level of intensity has continued in the start of april. The last two weeks of march, no question a sign it was indeed whether that disrupted the itnomy and auto sales and gives me confidence my original prediction for the year, growth at threeive percent, and breaking her 50 million, will indeed happen. I dealt with a bunch of people in autonation and always got great service. Do you think it is really the dealers that do not understand the customer that are so worried about tesla . A lot of people i spoke with at the auto show here in new york yesterday, the dealers said, we do a great job and add value to this whole experience and that is why we are not worried about tesla as a threat. Concerned arere more on the slippery slope argument, saying other manufacturers are now saying, tesla will do this, we should be allowed to do it. You will see an unraveling of the franchises i do not agree with them, but that is their argument. Auto you are around the show and youre talking to the president s of all the big automakers. Do any of them say to you, we would like to try direct sales in the u. S. At some point . Vaseline not. If i go back a decade ago, certain manufacturers attempted that and it was an absolute yes go and debacle. There auto show and youre talking to the president s of is a firm consenn the industry today that the Franchise System is very compelling as an equation for the consumer, the manufacturer, and the retailer. It will be in place for decades to come. The launch strategy strategy from tesla is really quite different. He should be free to do it. Ultimately, i think youll end weh a ranch is him. Are getting a question right now emailed to us from jim, who represents new jersey auto dealers. He said, you should be asked about your business relationship with tesla. He said tesla does not take trade, but autonation has a deal to take trays from tesla customers. Carsrs make more on used then new ones. In the slide automakers like tesla . I am a Free Enterprise guy. He is correct we have a relationship with tesla. We will take trays from customers who want to i a tesla, no question. Ok, so, therefore, that is why you would support that. He is saying,ion, what youre saying, which is that, look, this is a threat to our system. If you start letting tesla do this, you might allow ford to do this, you might allow other big automakers, and then it becomes a big threat. He ultimately says, this would not be good for the consumer. He is saying it is a threat to the status quo. These disruptions happen. That is what technology and innovation and progress is all about. It is a free country. Why cant you sell a product the way you wanted and why can i as a is him or by the product as the way you wanted. Is difference the auto dealer provides some service as well. I am an auto dealer. I just said i do not think it is a threat to the Franchise System. I am in such strong agreement with jim that on a Free Enterprise system, the Franchise System exists. Not because of protectionism. Muchecause it adds so value. In that sense, we are in complete agreement. The difference is there are no existing tesla dealers. If you did not have the trade deal with tesla, would you still support the system . Let me put this in context. We read detailed 500 cards last cars last year. We took 1000 vehicles and trade involving tesla. I am assuming you believe it will become a Bigger Company and there will be other electric cars that will become more in the consumer market. There is no question theyre coming from all the manufacturers. We are launching i three and i ate, fantastic new electric cars which will give Competitive Choices to tesla. We are building i centers within right nowise stores because we have existing capabilities erin the new electric cars coming from the mainstream manufacturers are being sold under the existing franchise, whether the nissan leaf or the bmw i three. Three. I do not know i do not know how he would want to be called. You call him a pim