How can auto dealers keep out a company that wants to sell direct to consumer? I don't get it. I don't own Tesla stock although it has skyrocketed. When someone comes out with an *inexpensive* hybrid then I am ready to invest. That said dealers have the power to prevent Musk from selling direct to consumer in Texas? Sounds like a form of union protectionism/favoritism to me.
****Why Texas Bans the Sale of Tesla Cars
When you’re about to compete in your first electric car race, brace yourself for the sound … of silence. But don’t let those quiet engines fool you because these days, quiet means fast.
With every major car company looking for a share of the booming electric car market, the competition to go faster and further for cheaper has become an all-out war. Detroit, Japan and Germany are all represented, but right now, an unlikely newcomer is getting top honors: the Tesla Model S.
It’s being hailed as a game changer. It’s the first electric car to win Motor Trend’s Car of the Year; an unprecedented 99 out of 100 rating from Consumer Reports; and now, according to the National Highway Traffic Safety Administration, it’s also the safest car ever.
But if the Model S really is the car of the future, then why has Texas banned its sales in the state and why are lawmakers in several other states trying to do the same?
To answer that, first you need to meet Tesla CEO Elon Musk. He plans on opening 50 new Tesla stores in the next year. And taking a page from the Apple playbook, Musk is selling his product directly to consumers. No hard sell. No commission for employees. And uniform prices at every store.
“We actually train people to educate,” explained Musk. “We always wanted to be a really low-key kind of friendly environment, where we're not constantly trying to close deals.”
That’s a dig at the traditional middlemen in the car-buying experience: the car dealers. Musk wants to cut them out completely. He thinks customers don’t like them and that dealers are prejudiced against electric cars.
“It takes them at least twice as much effort to sell someone an electric car and to educate them as to why an electric car is good,” said Musk. “And so if we were to go through the traditional dealer path, the result would be a disaster.”
So Musk is declaring war on car dealers, but car dealers are also declaring war on Musk. They have already successfully booted him out of Texas and there is anti-Tesla legislation pending in North Carolina, Colorado and Virginia.
“This happens all the time,” said Bill Wolters, the president of the Texas Automobile Dealers Association. “Someone wants an exception to the franchise laws. If we made an exception for everybody that showed up in the legislature, before long the integrity of the entire franchise system is in peril.”
The outcome of the battle remains to be seen, but it’s just one of many standing in Musk’s way of the Model S becoming a mainstream success. For all the hype, only 20,000 have been sold.****
