Tesla CEO Says He Might Go to Washington to Fight Dealer Franchise Laws

By Jacob Brown | April 15, 2013
Tesla Motors is continuing its fight to set up independent stores to sell its novel electric cars, and dealers are fighting back. Now its CEO, Elon Musk, says he's willing to take his case to Washington to smite the traditional dealership sales model in one fell swoop. "If we're seeing nonstop battles at the state level, rather than fight 20 different state battles, I'd rather fight one federal battle," Musk said in an interview with Automotive News last week.
Apparently, Musk hasn't heard from Honda's spokespeople about their thoughts regarding ongoing, constant litigation: "It’s just part of the cost of doing business in the U.S."
Tesla Motors has maintained that it's in the company's best interests to keep independent of dealer franchises, as most dealers make the bulk of their profits from service--not sales. It'd be unfortunate for them if they were to pick up a Tesla franchise because electric cars have far fewer moving parts and therefore need less maintenance. Musk and Tesla have fought a few different states already, going in front of Texas' House of Representatives last week to make his case. Texas has the strictest laws in the nation regarding car sales, making it nearly impossible for Tesla to maintain its model in the state. The National Auto Dealers Association's David Westcott, its chairman, said Musk going to Washington to petition would be a mistake. "NADA will vigorously defend the franchise system," said Westcott in an interview with Automotive News. "A better option for Mr. Musk is to take advantage of the dealer network that already exists." And thus the vicious cycle begins again. In Colorado, Tesla has only one store in Denver, and that's all it's allowed. Cases from the NADA against Tesla have been thrown out in New York and Massachusetts, and other states have had their share of red tape. Where dealers have a point is that automakers can't directly sell their cars to customers, competing against franchises who need need to have a margin to pay staff. They have similar products to one another. But Tesla's car is unique--no other automaker has ever made a luxury sports sedan that's all-electric. Tesla wants to control the people that sell its cars, much as Apple does with its stores, in everything from training to image and appearance. A franchise model wouldn't allow Tesla to do that. So the fight will continue. Get used to it, Mr. Musk. It will be worth it in the end. Source: Automotive News (Subscription required)