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Texas just shut Tesla down on the state level

Tesla CEO Elon Musk is determined to win the dealership fight by any means necessary -- even going to the feds.

A new report from Automotive News 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 North Carolina -- 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 supporting 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 State Impact, 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.

Sources: Automotive News [1], [2]

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I Like Having Dealers
By drlumen on 9/17/2013 6:42:18 PM , Rating: 1
While I hate the process of buying a new car I am glad that the dealerships are there. If I don't like the price or even the salesperson I can always go to another nearby dealer. That simple point keeps the market competitive.

There will also always be a service center nearby, from a dealership with a vested interest in keeping me happy.

While the dealers may add a nickel or dime that is fine. I have the convenience of sales and service nearby. Plus, it is the American way - own a businesses to make money. I don't fault them for that.

Also, people keep talking about direct sales, not all businesses do direct sales to the public. Look at the major appliance makers. It is unlikely any have a direct sales channel.

All this is really a tempest in a teacup. All Tesla really needs to do is partner with a chain of used car dealers to act as a Tesla dealer. Some paperwork, some surety bonds, some dealing with used car dealers and presto - Tesla has dealerships in Texas. He seems to want to make it harder that it actually is for some reason.

While it has no impact on me personally, there is something to be said about all the people that work at dealerships. To just kick them out into the cold and go to strictly OEM internet sales would lots of people and damage some local economies.

RE: I Like Having Dealers
By rountad on 9/18/2013 11:01:57 AM , Rating: 2
The dealerships should only exist if people want to pay to keep them in existence. That is, if they provide a valuable service.

If you only exist because of a law that requires your existence, what does that say about your value?

"People Don't Respect Confidentiality in This Industry" -- Sony Computer Entertainment of America President and CEO Jack Tretton

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