Auto Dealers Claim Electric Car Company Is Illegally Selling Straight To Customers

2 tesla store photo

Auto dealer associations are bent out of shape because Tesla – a much-maligned electric car company that has gobbled up lots of taxpayer subsidies while producing hugely expensive and thoroughly unreliable cars – is opening stores to sell the cars directly to consumers.

The auto dealers note that there are laws in place which prohibit manufacturers from direct sales, mandating a middle man between the consumer and manufacturer:

The Massachusetts State Automobile Dealers Association, among others, is waving around a decades-old law as it calls the Silicon Valley automaker’s network of “Tesla stores” illegal. Dealership associations have long lobbied to make it illegal for automakers to sell cars directly to consumers. The idea behind the protectionist law is to prevent automakers from killing competition and driving independent franchises out of business.

The most recent example of independent dealers flexing their muscles involved a flagship dealership Chrysler owned in Los Angeles and sold to a local franchise to avoid endless lawsuits.

Tesla argues that they’re not really selling cars at the store. Rather, they’re simply showcasing the cars, and giving those interested in purchasing one the opportunity to order and pay through their website.

That seems pretty weak, but it really shouldn’t matter. Why can’t manufacturers sell directly to consumers if that business model works for them?

That’s what Apple does with their Apple Stores (one of brains behind Tesla’s stores used to work for Appple).

One might presume that manufacturers could give consumers a significant savings if there weren’t a dealer, or middleman, to cut in on the transaction. Whatever else you may think of Tesla and their cars, if the company wants to direct sell they should be allowed to.

The alcohol industry, too, suffers from this same sort of protectionism. Alcohol producers, with some small exceptions, aren’t allowed to direct sell to alcohol customers. Historically this is a leftover from the prohibition days when the government didn’t want organizations set up by the gangsters to simply move in and dominate legitimate booze sales.

In modern society, however, it’s ridiculous that alcohol producers can’t sell directly to consumers. Mandating a middleman is good for the middleman, and pretty much nobody else.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • robert108

    Electric cars are a failure on all levels, no matter how they are merchandised.

    • Onslaught1066

      You would deny free people the right to purchase an electric car if they so desire and can afford them?

      • Spartacus

        So much for free market Robert…. but then who didn’t foresee this happening with an obamagasm company like “Tesla”? I guess even the piddly poor class that the Obama administration ignores will have to come up with a hundred grand to buy one of those. And thanks to the collapse of the housing bubble Barney Frank created and he’s withdrawing from politics, who’s going to fight for affordable car loans now that Barney has bailed to take up smoking pot with his boy friend?

        • robert108

          The automobile industry is an oligopoly, few sellers, and so the term “free market” doesn’t really apply.

      • robert108

        I didn’t deny anything to anybody; I’m just trying to discuss the facts of the situation. You really do like to make things up.

        • Onslaught1066

          I didn’t say that you did, I asked you if you would.

          There is a difference you know.. to everyone except hanniturd, that is.

  • kevindf
  • matthew_bosch

    Manufacturers should be able to sell directly.
    Rob, that’s a good point about alcohol producers. ND legislation is behind the curve on self distribution for Craft Alcohol manufacturing. Distributors provide a lot of assistance, but there should be unlimited local self distribution and manufacturing. Allowing easy market access to Craft brewing/distilling entrepreneurs has proven to be lucrative for other communities around the country.

    • http://sayanythingblog.com Rob

      I just don’t understand why people can’t buy things they want from the people/companies that sell them.

      • robert108

        Read up on oligopolies; it’s an economic term.

      • Bobby

        most of the middleman and pro franchisee law comes out of minnesota and wiscy firms., Matt Bosch, the micro booze laws are drawn by north dakota producers, they get what they want. If they failed to get self distribution, it was because they didn’t ask.

        • matthew_bosch

          Are there any ND producers? The only craft brew I’ve had recently is Fargo Brewing and their beer is made in Wisconsin.

          • Bobby

            Winery up by rugby and a casselton winery/distiller. Fbc was short funds, so they did the private label thing. Pretty favorable rules for the farmer vinter and distiller. Google away!

          • matthew_bosch

            Good to hear there are locals coming into the market.

      • matthew_bosch

        Entrenched institutions feeling entitled to the status quo and lobbing for legislation to maintain that status quo.

  • 2hotel9

    Sounds like they are refusing to pay auto dealers association for the right to sell what they build. These “stores” are simply dealerships which are not paying ADS their extortion money. If idiots want to buy electric cars that is their business, auto dealers association a$$holes.

  • Snarkie

    “In modern society, however, it’s ridiculous that alcohol producers can’t sell directly to consumers.”

    and I thought you were talking about cars.

    • mikemc1970

      And I thought you of all people would be in favor alcohol sales directly to the consumer.

      • robert108

        Yeah, let’s have more drunk drivers, drunk spouses and drunk criminals. Great idea. sarc

  • mikemc1970

    I don’t have a problem with companies selling their products directly to the consumer. I do have a problem with companies that need government subsidies in order to sell economically viable products directly to the public.

  • banjo kid

    would just like to interject that the Chevy volt has met the Roberts electric which also gets 40 mile per charge. it was made in 1896 so you might say GM has just kept pace with an old car like over a hundred years old, it still runs races today.

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