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Tesla still has a ways to go before it can bypass the National Automobile Dealers Association's annual lobbying budget of about $3 million

Tesla Motors wants to have its own method of selling its cars, bypassing dealerships entirely -- but that may be easier said than done.

According to the San Jose Mercury News, Tesla has a lot of challenges ahead if it wants to sell its electric vehicles without dealerships getting involved. Mainly, its obstacles are lawmakers and the auto dealerships themselves. 

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.

Translation: Tesla is a threat to their current business model. 

A huge issue is that auto dealerships have much deeper pockets -- meaning that they have a lot more to spend on lobbying, and lawmakers will surely side with them when money is involved. 

In fact, auto dealers spent $86.8 million on state election races across the U.S. between 2003 and 2012. They also spent $53.7 million on federal campaigns. 

Tesla, on the other hand, has spent less than $500,000 on both state and federal politics. 


“The challenge we face, of course, is that the auto dealers are very strong and very influential at the state level, among the legislatures, making it harder to get things done.” said Tesla CEO Elon Musk. 

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. 
 
But Tesla hasn't lost all hope in Texas. Rep. Eddie Rodriguez (D-TX) sponsored a bill to let Tesla to sell in Texas, and plans to offer a compromise in the legislature's next session that would allow Tesla to sell directly to consumers until it reaches 5,000 annual sales in the state Texas, and after that point, it would have to use a dealership.

Lobbyists say Tesla needs to staff up in Washington to "protect its interests." The company has one registered lobbyist -- Daniel Witt, a former aide to Sen. Dianne Feinstein (D-Calif.). Meanwhile, the National Automobile Dealers Association has an annual lobbying budget of about $3 million.

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.

Tesla could certainly use some help on the federal level right now, as the National Highway Traffic Safety Administration (NHTSA) announced that it will open a formal investigation into the recent fires associated with Tesla Motors' electric Model S. 

Source: San Jose Mercury News





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