Print 80 comment(s) - last by Mint.. on Apr 20 at 12:04 PM

He'll either lobby Congress for legislation or file a federal lawsuit

Tesla CEO Elon Musk is determined to win the fight against auto dealers and sell his company's vehicles directly to customers, but if he doesn't succeed at the state level, he's willing to make it a federal case. 

"If we're seeing nonstop battles at the state level, rather than fight 20 different state battles, I'd rather fight one federal battle," said Musk.

According to Musk, he will likely take one of two approaches if it comes down to a federal matter. He will either lobby Congress to pass legislation for the direct sales of EVs made by startup companies like Tesla (and tie it to an energy or transportation bill) or file a federal lawsuit to fight the state restrictions as unconstitutional violations of interstate commerce.

However, The National Automobile Dealers Association (NADA) said it will continue to defend franchise and consumer laws in the states.

"NADA will vigorously defend the franchise system," said David Westcott, chairman of the National Automobile Dealers Association. "A better option for Mr. Musk is to take advantage of the dealer network that already exists."

Musk has been pushing support for a recent bill in Texas, called House Bill 3351. This would allow distributors and manufacturers of electric vehicles (EVs) only to sell directly to customers without the use of dealerships. 

He has gone as far as offering to build a second manufacturing plant in Texas, and is even trying to appeal to Texas consumers by discussing a design for an electric pickup truck that would be stronger than any current gasoline truck.

In addition to Texas, Musk has had issues persuading other U.S. states to allow the auto startup to sell its cars directly. Some of its problem states include Colorado, Massachusetts, Minnesota, New York and Virginia. 

Musk could have a huge fight ahead, though. NADA said that 48 states have some sort of restricition on factory-owned dealerships. Musk went on to say that about 20 of those have restrictions that would make his business model difficult while about six others have restrictions that would make it extremely difficult. 

Musk has called the new Texas bill (and this overall business model of selling directly) a "life or death" situation for startups like Tesla. 

“For us this is life or death,” said Musk. “If we can’t go direct we will not be able to sell cars.”

In the past, Musk has said that he's open to a dealership model at some point when sales increase, since dealerships do promote competition and keep prices down. But at a startup level, he said this type of model isn't the best route. 

Tesla currently sells about 10,000 cars in North America, where about 1,500-2,000 are sold in Texas. 

Tesla is shipping over 500 Model S EVs weekly, and recently reported that the company is now profitable thanks to the Model S exceeding sales targets. Tesla Model S sales reached 4,750, which topped the sales outlook of 4,500 posted in the February shareholder letter.
In addition, the automaker is partnering with Wells Fargo and U.S. Bank to offer customers more financing options for Tesla’s vehicles. 

Source: Automotive News

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RE: Pretty pathetic
By siconik on 4/16/2013 1:00:42 PM , Rating: 5
LOL, I love how people who foam the mouth raving against "Obama's socialist takeover of the economy" have no problem whatsoever defending artificial barriers to entry, restriction of trade and legislative suppression of free enterprise to the benefit of entrenched moneyed interest as long as it effects the company they don't like. Typical fax-libertarian "Let freedom ring... in my moral envelope!".

RE: Pretty pathetic
By FITCamaro on 4/16/13, Rating: -1
RE: Pretty pathetic
By NellyFromMA on 4/16/2013 1:16:58 PM , Rating: 2
It's called negotiation and leverage. You don't go into negotiations asking for JUST what you want, then you end up with next to nothing.

ID what you want, then set the bar HIGHER and if you don't achieve it, you are still likely on your way to getting what you ACTUALLY wanted.

Actually, kind of sounds like the dealers... they should APPLAUD THIS! lol

RE: Pretty pathetic
By mdogs444 on 4/16/2013 1:28:45 PM , Rating: 1
This guy is looking for special treatment for EV's. What do you think he'll say if they scrap the law and let ALL car makers (GM, Ford, etc) sell directly instead of via dealership? It would lower their overhead....

RE: Pretty pathetic
By 1prophet on 4/16/2013 1:56:31 PM , Rating: 1
Contrary to popular belief, it's just the opposite, dealers subsidize the automakers, the dealers pay for everything from the vehicles in the lot through the floor plan to the help and facilities.

RE: Pretty pathetic
By FITCamaro on 4/16/2013 2:21:25 PM , Rating: 2
Like it or not, every state requires cars to be sold through dealerships. Even in California its shaky ground to sell direct.

If the public wants that law to change, change it. Special exemptions shouldn't be made only for a single group.

RE: Pretty pathetic
By BRB29 on 4/16/2013 2:32:54 PM , Rating: 2
The public would rather buy direct since it's cheaper. Of course, most of the public doesn't even know the current law exist.

RE: Pretty pathetic
By FITCamaro on 4/16/2013 3:20:29 PM , Rating: 2
And that is a different problem entirely. Educate the public (I know that goes against liberals ideology) about the laws. Then encourage them to change them if they agree.

RE: Pretty pathetic
By jRaskell on 4/16/2013 3:51:01 PM , Rating: 2
You can only educate the willing.

RE: Pretty pathetic
By 91TTZ on 4/16/2013 4:14:12 PM , Rating: 2
He's not trying to gain leverage- he just knows that he stands no chance of changing the entire industry so he's looking for a small exception for electric cars.

RE: Pretty pathetic
By Reclaimer77 on 4/17/2013 12:20:08 AM , Rating: 1
How the fuck does he have to "change an industry"? All he has to do is make a product that people want to buy. There's no conspiracy against him.

Enough with the "Musk vs The World" bullcrap. He's done a great job so far. But lobbying for special privileges and having laws changed just to favor his business is just too much.

RE: Pretty pathetic
By Reclaimer77 on 4/16/2013 5:33:48 PM , Rating: 2
Wrong. Not defending the barriers at all. But they are there. We should either remove them for EVERYONE, or have everyone play by the same rules.

Giving Tesla Motors a special exemption, simply because they provide EV's, is broadly unfair. Also it introduces many problems within the current sales structure.

Your post is just rhetoric and hyperbole with absolutely no structure beyond it. No wonder it got a 5...

Typical fax-libertarian "Let freedom ring... in my moral envelope!".

Freedom for Tesla, but not others, isn't freedom my good sir. If Musk was challenging the rule in general, I would be cheering. Instead he's lobbying (I thought lobbying was evil on DT? I guess it's fine when it's the GREEN lobby..) for special status!

RE: Pretty pathetic
By Spuke on 4/16/2013 6:57:36 PM , Rating: 2
It's fine because they agree with it. The epitome of hypocrisy.

RE: Pretty pathetic
By Mint on 4/17/2013 9:39:44 AM , Rating: 2
He doesn't want an EV exemption. He wants a low volume exemption that other small carmakers could use, one that he'd have to give up at some point to keep his company growing. As someone mentioned above, motorhomes can also be sold direct (and they actually do almost 10x the sales volume).

RE: Pretty pathetic
By Mint on 4/17/2013 9:46:54 AM , Rating: 2
And before anyone says it, yes, I know that the Texas bill is for EV makers, but at the federal level he'd be fine with a more general bill.

It helps startups get their foot through the door, but low volume will keep them from threatening the existence of the dealership industry (which I agree plays an important role in a competitive marketplace).

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