Electric cars

You Can't Just Sell an Electric Car to Someone, This is America!

Tesla Motors getting thwarted by car dealer friendly laws



Elon Musk, the CEO of Tesla Motors, is facing resistance to his company's model of trying to sell automobiles directly to consumers. Green Car Reports rounds up some of the problems:

Ever since Tesla announced its plans to sell cars directly, with factory-owned Tesla Stores and Tesla Galleries acting only as display showroms, car dealers and their associations have denounced the plan.

They've also sued Tesla for violating franchise laws in several states–Massachusetts, most notably–and gotten laws changed in others to make Tesla's model flatly illegal…

Most states have some variation of a law that says automakers cannot open wholly-owned dealers that compete with franchises selling the same brand.

Dealers feared in the post-war period that automakers would set up their own dealerships and give them preferential financial terms over franchised dealers.

But Tesla Motors has no franchised dealers to protect.

Nonetheless, the Colorado Auto Dealers Association got that state's law changed in early 2010 to forbid direct sales of any car by any maker soon after Tesla opened its first store there.

State auto-dealer groups are viewing the Colorado legislation as a model, and such efforts may pop up in other states as well.

Musk is done going through the petri dishes of democracy, and says he'd "rather fight one federal battle." Automotive News describes Musk's two options:

1. Lobbying Congress to pass explicit legislation to allow direct sales of electric cars made by startup companies such as Tesla. Such legislation could be tied to an energy or transportation bill, he said.

2. Filing a federal lawsuit challenging the state restrictions as unconstitutional violations of interstate commerce.

Tesla Motors received nearly half a billion in loans from the Department of Energy in 2009, which should theoretically provide the feds with some impetus to liberalize the domestic car sales industry.  And then maybe one day in America you can buy a car from whomever you want, whether or not the car dealers think you're going to get too good of a deal for it. But it probably won't be an electric anyway, the president's lofty goal of 1 million plug-in hybrid cars on the road by 2015 looks exceedingly unrealistic.

Elon Musk was profiled in a series on rocket men (he is also the CEO of SpaceX) in an issue of Reason last year.

NEXT: Obamacare Seen as Major Threat by McDonald's Franchisees

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. How about we don’t subsidize these neo-Edsels and let these idiots just fight it out?

    1. Slap a HEMI in one of those pigs and you might have a real car.

  2. This is just as retarded as the three-tier system with booze.

    1. three-tier system with booze.

      Sober, drunk, passed out?

      1. I know you were joking, but it is producer/distributor/retailer.

        1. So which one of them is respectively sober, drunk, and passed out?

          1. retailer may be drunk but distributors are the guys who end up passed out.

            1. What do the consumers get?

              1. A big dildo up the ass.

            2. Distributors are usually billionaires.

              1. You two HAD to ruin a good pun-formance with your political commentary?! Really?! There are places on the interweb for that…

    2. Quick, interesting read on franchise laws and alcohol:


      Basically, franchise laws make no fucking sense to anyone outside of established distributors.

      1. Diffuse costs, concentrated benefits


  3. 2. Filing a federal lawsuit challenging the state restrictions as unconstitutional violations of interstate commerce.

    That might actually work. The Feds hate anyone tramping on their territory and the rubber stamp SCOTUS isn’t going to stop it.

  4. I liked this better the first time I read it, when it was the movie Tucker: The Man and His Dream.

  5. Everyone just slow down here a minute.

    There’s a trade group attempting to protect America from the scourge of electric vehicles– an automobile technology abandoned in the 1800s.

    I’m reserving judgement.

    1. Good point. But it’s just rich doofuses who can actually afford this car. I say, let them be stupid.

      1. I’m with Democrats on this one, we need to help them make “informed choices”.

    2. I don’t care if they’re trying to sell a flop of a car, the franchise law is just stupid. I’m rather annoyed that I can’t simply order a car from the manufacturer and get it delivered. The local sods who run the dealerships arne’t worth my time or my money. I see no justification for any law designed to prevent them from having to compete on competence, customer service and price. They ignore the first two because they’re the only game in town and know how sleazy their fellow dealers are. I don’t have the capital, credit or inclination to open a competing dealership, but I do want the market opened up.

  6. In PA, car dealers got themselves a state-mandated day off with no fear of competition–you can’t buy a car on Sunday.

    1. I heard that in Italy, if you walk into a car dealer with money in your hand, ready to buy a car, the dealers really aren’t that interested.

      1. Idiot.

        You are supposed to go to the back door of the dealership and pick the car up at night.

        The next day, the dealership will report it ‘stolen’ but will mysteriously garble the VIN in the report to police.

      2. This is how Italian business works in general. Because of socialism, Italian service industry workers really aren’t interested in productive customer service at all. Just look at Alitalia.

        1. Shit! I just googled it, and I’m wrong, it was Peter Mayle telling anecdotes about French bureaucracy in his book A Year in Provence.

          So, I guess it’s that way in France, too.

    2. PA is it’s own special brand of stupid. Almost perfect blend of R and D idiocy. It’s.. breathtaking at times.

      1. It also has the roughest roads and the lowest speed limits in the country. Given that road degradation correlates directly with driving speed, that takes a special kind of ineptitude.

        1. PA road problems have a bit to do with geology, but the power of PENDOT to make a difficult situation worse should never be underestimated.

          1. It’s also an age issue. We started building highways before nearly anyone else, and as a result a lot of our primary roads are hideously out of date.

            1. Even so, 200 years is a long time to go without an upgrade.


              1. Actually it’s 300, they were colonized before the revolution.

    3. Car dealerships are closed on Sundays in CO too. I kind of like being to go look around dealer lots on Sunday without having to worry about being hassled by a sales-douche, but Blue Laws are still stupid. If a dealer want to stay open and make some extra cash it should be their fucking business.

  7. Franchise laws suck in the beer world too.

    In a majority of states, you cant self-distribute.

    1. Even soft drink brands have dug themselves in to binding horseshit with distribution franchises. This is what happened to the bottler of the Dr. Pepper with sugar in it. Don’t get caught importing Mexican Coke to your own retail outlet without going through the local Coke distributor, whether you have a contract with them or not.

      1. Is the second part of the paragraph still talking about soft drinks?

        (R.I.P. Dublin Dr. Pepper) šŸ™

    2. In Kentucky, a microbrewery license shall not be deemed to be incompatible with any other license except for a distributor’s license under the provisions of KRS 243.180.


      You can self-distribute in VA if your distributorship is a separate legal entity. And I’ve seen breweries advertise kegs for sale at their breweries too. Not sure how that one works.

  8. Shit. We have a cartel using the legislatures to protect them from competition vs a heavily subsidized crony capitalist.

    No matter what the outcome, the average Joe American is going to get screwed in the tailpipe.

    1. the average Joe American is going to get screwed in the tailpipe

      But if electric cars don’t have tailpipes, then where else would they put the banana?

      1. Putting it in the anode is going to be a lot more painful.

        1. Reason posters are uncharacteristically funny today (yesterday). I came here to get my cynic on, damn it!

  9. the Colorado Auto Dealers Association got that state’s law changed in early 2010 to forbid direct sales of any car by any maker soon after Tesla opened its first store there.

    Fuck Colorado. And fuck crony capitalists too. But seriously, fuck Colorado.

    1. I concur. Colorado is beautiful, but stupid.

      1. Fuck Boulder up the Aspen.

    2. Fuck Colorado for legalizing weed and then implementing this and gun control! I’m so torn!

  10. Rent-seekers gonna seek.

  11. Serves him right for starting a business.

  12. Car dealers are some of the worst parasites in America. There is no reason in this day and age you shouldn’t be able to buy a new car directly from the manufacturer via the internet or from Amazon.com for that matter. State laws prevent you from doing that so car dealers can get rich. It is bad enough you have to buy from an authorized dealer. What is worse is that since you can’t buy directly from a manufacturer, there is no known price for a particular car. The out the door price of cars varies tremendously by how much the dealer is able to rip off the weak or uninformed customer. I shouldn’t have to play “fuck you go tell your supervisor this is all I am paying” to buy a car. I should be able to go online, pay what the manufacturer wants and be done with it. But I can’t thanks to these laws.

    1. You buy new cars? Who does that, when a used car from a private party a few years old has no sales tax and is perhaps half the price of new?

      1. Who does that, when a used car from a private party a few years old has no sales tax

        In your state, maybe. All the states I’ve lived in, you have to pay sales tax when registering the car with the DMV as the new owner.

        Some states make you pay sales tax on actual price (SC). Some (NC, MD) determine the blue book value of the car and make you pay sales tax on that, to avoid non arms length transactions. Some (NC) have exemptions for transfers to immediate family members who are both state residents (and its an intrastate transfer.)

      2. Problem with a private party sale is that often they are exempt from lemon laws and even where they are not there is no guarantee that they would have the cash to return to you should there be issues with the car, they also require you to have cash in hand which may or may not be an issue for you.

        As far as no sales tax, not sure where you live but here the sales tax is collected by the RMV when they issue/transfer the plates. The only way to avoid paying sales tax for the car is to not register it, further the sales tax you pay is based on the higher of the sales price or the Blue Book value to ensure no shennanigans with the sale price to avoid paying sales taxes on it.

        Finally, thanks to cash for clunkers and new car finance rates being cheaper than used car finance rates there are actually classes of cars where new cars are significantly cheaper than used cars on the same model.

      3. I’d love to know where people are finding all these toddler aged new cars for half price.

    2. ” I shouldn’t have to play “fuck you go tell your supervisor this is all I am paying” to buy a car.”

      I’m in the market for a new car and my wife and I are seriously considering turning that table on the dealers.

      Basically she goes into the dealer, does the test drives and finds the car she likes (since it will primarily be her car) then when it comes time to negotiate a deal she handles it all but has to call me to run everything past me for approval, then I don’t come in until it is time to sign papers

  13. It’s sad that option 1 is likely to be the more politically viable strategy.

    Option 1 is federal-level cronyism vs. state level cronyism.
    Option 2 is how the country ought to work (hahahahah).

  14. I don’t know about if this would be true of cars, but buying directly from the manufacturer makes the heads of DMV employees explode. I bought a kit motorcycle from the manufacturer and put her together myself. When I went to plate her, none of the computerized forms were applicable..not make, not model, no dealer info. They had no idea how to make a registration out of the title certificate issued by the manufacturer. I came very close to murdering someone that day; fortunately my husband recognized the look, made a few phone calls–I can for this alone forgive my son for marrying the daughter of the chief of police– and got my motorcycle plated.

    1. buying directly from the manufacturer makes the heads of DMV employees explode.

      Like squeezing a pimple, the blast effects would be minimal but the mess would be disgusting.

  15. Sounds like a sure fire plan to me dude.


  16. It is illegal to sell vehicles from a dealership on Sundays in Illinois. “Blue Laws” usually connote some religious prohibition to economic activity. In Illinois 30 or so years ago large auto dealers in Cook County wanted to give their employees a day off but did not want smaller sales lots to remain open selling cars when the big boys were closed.
    No problem. Just lobby Springfield to shut everyone down. Free Market capitalism be damned.

Please to post comments

Comments are closed.