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
9/18/2013 5:38:09 PM
Where in the f%ck do you get the idea that dealers would have to sell cars for no profit?
If GM/Ford/et al wanted to remain in the dealer-centric model, then their cars would all get sold via dealers, and the dealers would make money. The point isn't that dealership employees don't deserve to make a living - the point is that the assertion that dealerships are "necessary to provide price competition" is f%cking retarded.
As I have already noted, dealerships serve useful purposes for distributing inventory, and providing access to warranty services and of course regular maintenance and repair.
If GM et al decided to sell directly to consumers, like Tesla does (and like vast numbers of manufacturers in other industries), then maybe things change at dealerships. Maybe all GM cars sell at a fixed rate, and all dealerships get a fixed % of that sale when the car comes out of their inventory...just to think of one example. Or maybe the dealership model stays the same, and dealers try to compete for car sales based on out-servicing the customer. Ooooo...scary idea - gaining customers by providing better service.
Ultimately GM et al would still need the dealer networks - they can't possibly function without them. They *have* to have the inventory distribution, and they *have* to have the availability of warranty services. If stuff changes, the industry will change with it, and dealerships won't be going anywhere.
Only the a$$-smackingly stupid idea that dealerships keep costs down for consumers.
"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton
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