By The Numbers

Tesla Motors wants to bypass car dealers

Queena Kim Jul 3, 2013

What do you gotta do to sell a car these days? In Tesla’s case appeal to the White House.

The electric carmaker has been trying to sell its cars directly to consumers online. In true Silicon Valley fashion, they want to cut out the middlemen — i.e., no dealers or third-party websites run by dealers that sell cars.

In its petition to the White House, Tesla said, “state legislators are trying to unfairly protect automobile dealers in their states from competition. Tesla is providing competition, which is good for consumers.”

According to the Chicago Tribune, “No fewer than 48 states ban or limit direct sales of automobiles. Some states allow Tesla to sell its cars through company-owned stores. Some allow Tesla to open showrooms but not sell cars in them.”

The Tribune goes on to say that the dealerships have deep pockets and they’re spending money on lobbying legislators to keep protective laws intact. Texas Gov. Rick Perry is blocking Tesla’s direct-to-consumer approach. The North Carolina senate just passed a bill that would, in effect, ban Tesla’s business model.

So why the opposition to car dealerships? According to Marketplace’s Mark Garrison, who reported on the story for our afternoon show, in the past, dealers put in place such laws so they wouldn’t be pushed around by powerful automotive companies. The automakers could presumably undercut the dealerships and pressure them on price.

Of course, the heyday of American car makers has passed and today dealerships have pivoted their message: It’s about jobs and filling city coffers. In other words, dealerships create jobs and pay state and local taxes. The new message, Garrison says, appears to be: If you threaten car dealerships, you threaten the local economy.

In response, Tesla launched its White House petition, which just got the 100,000 signatures required to trigger a response from the President. But it’s hard to say how much authority the President has over local and state jurisdictions.

So the question is: are car dealerships a legacy of the past and so obsolete?

Or do we need to save them from the Internet economy and make sure they don’t go the way of local bookstores?

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