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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 Reclaimer77 on 4/16/2013 5:27:09 PM , Rating: 2
I'm surprised to hear you say that. I figured you'd be more on the lines of "the dealerships do not have a "right" to someone else's profits". Why should a company be forced to use a dealership business model, if it will hurt their profitability?

I agree with you.

My problem is that Musk isn't challenging the rule et-all, he's just fighting for (yet another) special exemption simply because he's offering EV's.

Do we want level playing fields or not? I'm a bit confused.

RE: Pretty pathetic
By Reclaimer77 on 4/16/13, Rating: -1
RE: Pretty pathetic
By lelias2k on 4/16/2013 6:02:22 PM , Rating: 5
When you are fighting 100-year old companies, with a product that challenges one of the most - if not THE most, powerful industries in the world, I think you are entitled to try to play by the same rules.

Especially since what he is proposing is something that I see eventually becoming common practice.

I sold cars and I honestly hate the whole dealership experience. I would love to simply go online, put my car together, get financing, and wait for it to arrive. Screw the middle men, as they are not adding anything positive to the process. Unless you think that all the things they try to put down your throat are any good. In which case let me know and I'll be happy to sell you your next car.

And let be honest, we already are half-way there. A lot of my customers used to arrive knowing if I had the car they wanted, what would be a good price to pay, etc.

So, in the end, killing dealerships would benefit everybody but the dealership. But why would Musk fight for an industry that is clearly against him?

RE: Pretty pathetic
By seamonkey79 on 4/16/2013 6:53:12 PM , Rating: 2
I am about completely turned off dealerships, enough that I'm still fixing my car myself to keep it going while I figure a way around dealing with a dealership. Salespeople in most businesses are a bit shady, but car dealerships still ooze that classic used car sales stereotype of the 60s/70s television shows, only they're trying to sell you a new car.

RE: Pretty pathetic
By Spuke on 4/16/2013 6:55:33 PM , Rating: 1
When you are fighting 100-year old companies, with a product that challenges one of the most - if not THE most, powerful industries in the world, I think you are entitled to try to play by the same rules.
Yes, exactly and one of those rules is to open a dealership like everyone else in the auto field.

"Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn." -- Seagate CEO Bill Watkins

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