In case you haven’t been keeping up with national news, a handful of states across the US have voted to make illegal Tesla Motors’ strategy of selling cars directly to consumers through its company-owned stores. A few of these states have even taken it a step further, moving to effectively ban even Tesla’s galleries, which are not even set up to sell to consumers.
Now, six state legislators in Texas want to reverse that state’s ban on Tesla stores. They’ve introduced legislation to both the state House and Senate proposing that any automaker might be allowed manufacturer-owned stores so long as they do not compete with an existing dealer franchise in the state, and they number twelve or fewer.
Automotive News reports that according to a poll conducted in the state, 84 percent of its citizens support the prospect of consumers being allowed to buy certain new models directly from the automaker, which by extension would legalize Tesla stores. And that’s not Tesla’s only source of support; the Federal Trade Commission came out in support of Tesla stores, calling any legislation to ban them is “anti-competitive.”
Senator Kelly Hancock – who presented the bill at the state Senate level – remarked that “free market principles are the foundation of our strong Texas economy. [The bill] helps sustain a competitive marketplace and gives consumers more choices.” Representative Jodie Laubenberg derided the ban on Tesla stores as being “protectionist” and “killing innovation.”
On the other side of the issue, as always, are the dealers. President of the Texas Automobile Dealers Association Bill Wolters said that Tesla stores don’t benefit the state like dealerships do, as 100 percent of the profits go directly to the manufacturer. And, he insists, Tesla stores won’t be forced into any sort of competition that would otherwise lower prices and give consumers more choice. Thus, Tesla’s aim would simply be to maximize profits, with no regard for the customer, argues Wolters.
Of course, the latter point is highly contentious, as it could be effectively argued that dealerships suffer from more substantial price gouging because they exist as businesses between the manufacturer and consumer, and must strive to turn their own profits – not just those of the automaker.
The question of Tesla stores has turned out to be a more divisive issue than we ever imagined; it makes sense that for an automaker just starting out, with comparatively limited production capacity, establishing a nationwide chain of franchises might be out of the question. In the meantime, the automaker must have some way of selling its product.
But we suppose we don’t speak for everyone. For now, at least, the pressure still heavily rests on Tesla Motors to establish a franchise, lest they miss out on sales in a great many states.
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