Tesla CEO Elon Musk May Make Dealership Fight a Federal Case
September 17, 2013 12:14 PM
comment(s) - last by
Texas just shut Tesla down on the state level
CEO Elon Musk is determined to win the dealership fight by any means necessary -- even
going to the feds
A new report from
says Musk may take the dealership fight to the federal level since working at the state level hasn't been completely successful.
Here's the deal: Musk believes that auto dealerships don't do a very good job at selling specialty cars like Tesla's high-end electric vehicles (Roadster, Model S). Hence, he's looking to run his own Tesla stores around the U.S. where he believes his cars will get a fair shot at being sold.
However, auto dealerships are fighting back. If Tesla were to succeed at opening its own dealerships, other automakers could try to do the same. The National Automobile Dealers Association (NADA) said that dealerships are necessary to ensure competitive prices for customers, and that it will continue to defend franchise and consumer laws in the states.
While Tesla has been able to fight off auto dealership assaults in some states -- like
-- it has had a more difficult time in others, like Texas. The state has laws that protect the franchise dealership system where car manufacturers are not allowed to run and own dealerships -- and Texas isn't looking to budge on that issue.
Musk has worked quite a bit to eliminate the conventional dealership model for his cars in Texas, going as far as
a recent Texas bill
called House Bill 3351, which would allow distributors and manufacturers of electric vehicles (EVs) only to sell directly to customers without the use of dealerships. He also offered 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.
Tesla made a case before the state legislature this past session that Tesla should be one exception to the state laws, and be allowed to sell its cars to the public directly. The state legislature blew it off without even taking a vote, and that was that. According to NPR's
, the reason was because Tesla failed to lobby as much as the dealership associations. Tesla spent about $345,000 in lobbying while dealerships spent about $780,000.
Texas isn't alone in attempting to keep Tesla at bay. New York, Massachusetts and others have attempted to shut down Tesla's stores as well.
With that, Musk is looking into taking his fight to the federal level in order to bypass each state's restrictions. Musk may lobby Congress or file a federal claim saying that the state laws banning Tesla-owned dealerships are unconstitutional.
Musk said in April that he'd be willing to make the fight a federal battle.
"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.
Automotive News 
This article is over a month old, voting and posting comments is disabled
9/17/2013 4:48:43 PM
...a lot of people live in places where there's not anything for 150 miles around. And regardless, whether a shop is 150 miles or 500 miles away, that wouldn't stop collusion. Especially in the digital age.
9/18/2013 12:00:14 AM
You asked what's to stop a small number of dealers in an given area from colluding. He replied to that, and now you're kind of throwing a different argument around. 150 miles... 500 miles... digital collusion. Well golly gee if factory owned dealers doesn't fix that, nothing will!
If you live someplace where you don't have anything around, there's nothing to stop you from getting boned either way - except for used cars. Realistically, whether private or factory owned, prices aren't going to go down. They'll charge you whatever they can get away with... quite similar to today!
I've seen surprisingly large discrepencies in pricing between dealers if you are willing to travel even 50 miles. Imagine if ALL of the dealers have the same "owner" - the manufacturer. Not only is normal selling price going to stay the same, now if you're interested in a particular model, you can't even play two same-marque dealers against each other.
9/18/2013 5:29:19 PM
Sorry, but reality called and wants to let you know that you're wrong.
All you have to do is realize that if middlemen were a requirement for competitive pricing, then direct sales from manufacturers to consumers would be troublesome in all markets.
You can't say that middlemen are necessary for car sales, but not necessary for anything else. The universe doesn't work that way.
"If they're going to pirate somebody, we want it to be us rather than somebody else." -- Microsoft Business Group President Jeff Raikes
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