backtop


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



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

RE: Pretty pathetic
By FITCamaro on 4/16/2013 1:16:10 PM , Rating: 3
Take that up with the state then. Don't ask for special treatment because your business model isn't viable under the same system as everyone else. It should either be changed for all or none.

It is certainly legal either way. But I think it's shady for a business to ask that they be able to operate under different rules than all their other competitors.


RE: Pretty pathetic
By 1prophet on 4/16/2013 1:58:55 PM , Rating: 2
They don't have any competitors, they are selling a unique product to a niche market like the motor home companies.


RE: Pretty pathetic
By FITCamaro on 4/16/2013 2:17:02 PM , Rating: 2
They are a car manufacturer. Their competitors are every other car manufacturer.


RE: Pretty pathetic
By Spuke on 4/16/2013 4:19:00 PM , Rating: 2
quote:
They don't have any competitors, they are selling a unique product to a niche market like the motor home companies.
Most motorhomes are sold through dealers. That said, an automakers competition is other automakers. And, yes, Tesla's competition IS from other automakers.


RE: Pretty pathetic
By HostileEffect on 4/16/2013 2:58:20 PM , Rating: 2
Id rather buy directly from the manufacturer and line my own pocket with the savings.
The state has no business telling me how to buy anything.


RE: Pretty pathetic
By FITCamaro on 4/16/2013 3:24:18 PM , Rating: 2
What someone would rather do and what laws say they can do are two completely different things.

A state has the right to pass laws that govern how it's citizens do things(within the bounds of the federal constitution and it's own constitution). If you don't like a law, you have the right to petition for it to change or be removed.


RE: Pretty pathetic
By HostileEffect on 4/16/2013 3:42:50 PM , Rating: 2
The law only dictates the price paid if proven to be in violation of it, it can't control anyone passed intimidation.


RE: Pretty pathetic
By GarnS on 4/17/2013 6:55:38 PM , Rating: 2
Ok FITCamaro, you seem to go on and on about how Mr. Musk is being so unfair to ask for these laws to be changed. And then you yourself say “If you don't like a law, you have the right to petition for it to change or be removed”. Is that not exactly what Musk is doing?


RE: Pretty pathetic
By HostileEffect on 4/16/2013 2:58:20 PM , Rating: 2
Id rather buy directly from the manufacturer and line my own pocket with the savings.
The state has no business telling me how to buy anything.


"There is a single light of science, and to brighten it anywhere is to brighten it everywhere." -- Isaac Asimov














botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki