Skip to main content

Tesla decries special interest group legislation, asks for same

America loves an underdog. Right up until it doesn’t. Why Tesla should tread lightly regarding its direct sales model.

For those who have been under a rock for the past three years, Tesla is an automobile manufacturer. Specifically, they make luxury electric cars in relatively low volumes. Their plan is to do that a while longer and then introduce a breakthrough vehicle for us all that is compelling to drive, electric, and affordable.

One advantage that makes Tesla very special is the company does not have any car dealers. It sells its products and services its products directly. When you buy a Tesla, you buy from Tesla. You don’t have to go through most of the stereotypical things we dislike about dealerships. That is where it runs into some trouble.

Most people hate to buy cars. Most people blame car dealers for this. So, right off the bat, Tesla is ahead in terms of public opinion. However, Tesla is running into legal challenges in all markets, but a few key ones in particular. Long ago all the car dealers got together and formed a sort of cartel. They used their influence to get state legislators to pass laws that say only car dealers can sell cars. There was good reason for this. They were afraid of holding huge inventory and making huge investments and then having the principals they sold for (the car makers) sell direct and undercut them.

Tesla is now fighting a guerrilla war all over the US against these laws. In some places like Texas, it is losing the fight. In other places, like Ohio it is winning. Right now in Georgia Tesla is backing a bill that creates an exemption to existing law that allows for zero emissions vehicle makers (electric car makers) to sell up to 1500 of their cars directly each year. It previously had a smaller exemption. This would allow only Tesla to continue to increase its sales while selling directly in Georgia. The other EV automakers like Nissan won’t sell direct because they have dealers who would be mighty angry if they indeed sold direct around them. As a Tesla fan, I cheer when Tesla wins cases like this and I support the company’s efforts.

Concurrently, in Washington State, another key market for Tesla, the dealer groups are trying to pass legislation that would stop Tesla from adding more stores and more sales in the state. James Chen, Tesla’s vice president of regulatory affairs and associate general counsel was quoted by one media outlet as saying “You’re looking at basically a special interest group, the dealers, trying to establish through the law a monopoly on how consumers can purchase products.”

Just to take a step back for a moment, here we indeed have a special interest group, an organization that represents all of the dealers of all of the car brands in Washington State, trying to use legislation to serve its needs. Commenting on that negatively is an automaker who, in another key state at this very moment, is trying to use legislation to serve only its needs. Comparing the two groups it seems to this outsider that both are special interest groups, and in fact the single maker of electric vehicles is a little more special than the very large group that represents all of the automakers’ dealers.

I’m still rooting for underdog automaker Tesla in its quest to shake up the establishment and to find a way around the existing laws acting as a barrier to its entry. However, Tesla could work with dealers now if it chose to, and sell as many luxury Evs as it can build. Tesla is the special interest group here. It should be careful how it characterizes the folks that oppose its direct sales model if it wishes to keep the thinking (and voting) public on its side.


Johnny (not verified)    February 12, 2014 - 12:45AM

Tesla is NOT the special interest group however you put it. From the beginning of our civilization, people have always been able to sell what they make whatever way they want as long as their products are safe and functional as advertised. No one should have the right to strip people that right. Just because Tesla refuses to obey, it doesn't make it a special interest group.

Aaron Turpen    February 12, 2014 - 1:38AM

This nation is full of special interest groups and their protectionist cartels. Lawyers are one (try practicing law without a "license"), doctors are another (ditto), hairstylists (licensing..), and more. Licensing laws aren't created for public safety, they're created to make a special cartel that only those with special access can get into; all others are banned from business.

Oh.. and Tesla IS a special interest, Johnny. Or don't you know about the EV tax credits available federally and in many states? You know, the one that is only for special interests like Tesla who make EVs?