Former Tesla insider joins direct-to-consumer sales debate: Let the best model win

Last week, Virginia Auto Dealers Association president Don Hall joined Daily Dealer Live, where he defended the franchise model as the backbone of trust, transparency, and competition in retail.

This week, Farzad Mesbahi (a former Tesla $TSLA ( ▼ 0.7% ) employee turned content creator @Farzyness) offered a different lens to Daily Dealer Live hosts Sam D’Arc and Uli De’Martino. Not to tear the franchise model down—but to argue that both systems should be tested, and backed, if they still deliver.

Plus, he knows the direct model well.

Mesbahi worked at Tesla from 2017 to 2021 in service-side supply chain analytics and has been an investor since 2012. And what makes the model work, he says, comes down to two things: structure and incentive.

Because when the company that designs the car also pays the service bill, he says there’s real pressure to build a product that doesn’t need fixing.

That said, he knows Tesla’s flaws just as well.

❝

“They have had quality issues,” Mesbahi said. “But this is my point. The forcing function exists for Tesla to do a better job. Because now Tesla's gonna incur all the warranty costs, all the servicing costs, right?”

Turning to the franchise model: He argues that buying a car through a dealer the traditional way sometimes comes with unnecessary friction, especially around price and product selection.

On top of that, franchise dealers tend to rely on service for long-term profit, a setup that, in his view, can work against the customer, especially when product quality slips.

During the live show: Other sides of the argument came through, from hosts, commenters, and earlier dealer perspectives. Points around community giving, local accountability, and real support when OEMs fall short were all brought his way.

Mesbahi didn’t disagree with the claims. But he did argue that those contributions only go so far if the core ownership experience isn’t there, and that’s his broader point: the automotive market has shifted, and in chasing margins, some dealers may have lost sight of the fundamentals.

❝

“If you're doing amazing things for the community, but you're fundamentally not providing the thing that the car buyer's looking for—which is a very affordable car that I never have to service basically, and does exactly what I want—then everything else is gravy. But we can't rely on the gravy to justify that the fundamental thing has been disrupted.”

In other words: Giving back is important, but if the car buying process doesn’t hold up, that’s what people remember. If a brand can execute well in both, Mesbahi says they’ve earned the customer (and their place in the market), regardless of the model.

❝

“You could have a situation where the top three [direct OEMs] are amazing and the bottom 70 are garbage. When that happens, let’s have a dealership model…but let's not say direct-to-consumer is bad automatically—when there is a company out there that's actually doing a really good job, in my opinion.” Mesbahi said.

Big picture: It’s not an anti-dealer pitch. He believes if direct works better at times, great. And if franchise stores deliver more, the market should back it.

❝

“This is gonna be the discussion of our time for the dealerships,” he said. “There are wonderful people in these communities, I agree. But, but ultimately, if there's a company out there that just does it better, does that automatically mean we shouldn't have that? No. That's crazy. That's anti-capitalist.”

A quick word from our partner

It’s all inside the machine.

Minimizing risk and maximizing profits is about more than knowing what’s happening today. It’s about seeing what’s around the corner.

The Lotlinx VIN Manager is the industry’s first inventory data platform that presents powerful insights and predictions at the intersection of inventory management, customer data, and media consumption data.