Economics

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

Tesla Motors getting thwarted by car dealer friendly laws

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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.