Just as the Kook Brothers are fighting a losing battle against electric cars and renewable energy, the car dealers in several states continue to oppose allowing Tesla to sell its cars direct to consumers. Last year, Tesla spent $3,000,000 building a stunning new showroom in Salt Lake City, Utah, only to be told two weeks before it opened by the state’s Attorney General that Utah law prohibits auto makers from owning dealerships. Under the AG’s ruling, people could go to the Tesla store to look at cars and get repairs, but were prohibited from taking test drives, discussing prices, or buying a car while there.
The Utah legislature took up the matter, but ended up passing a bill that allows people to buy a car at a Tesla store but forces Tesla to ship each car purchased into Utah from out of state. The company cannot maintain an inventory of cars within the state. Tesla is challenging the law in a legal action that is now before the Utah Supreme Court.
“If Utah is really about free markets, if it’s really about innovation, if it’s really about new business models that provide the consumers with choice, why would you restrict that?”asks Jim Chen, the company’s vice president for regulatory affairs. Governor Gary Herbert wants Tesla to be able to sell in Utah, even mentioning the company in his State of the State speech. He is hoping lawmakers can work something out before the session ends, spokesman Jon Cox told ABC News.
Tesla says that it can’t sell its cars through traditional third party dealerships because they have to convince customers electric cars are better than a car with a traditional internal combustion engine. Tesla maintains that constitutes a conflict of interest for conventional dealers, whose major source of income comes from selling ordinary cars.
Support for regular dealers is eroding. This week. Cadillac boss Johan De Nysschen proposed a new system for smaller dealers that sounds a lot like the Tesla plan. Customers would view new cars on virtual reality devices, then order them online. Cadillac would fill the orders from cars available at regional distribution centers.
Tesla is also renewing its effort to get the state of Connecticut to change its law prohibiting direct sales. A bill approving the change passed the Connecticut House of Representatives last year but died in the Senate after Connecticut’s dealer association mounted a furious opposition.
“We believe we would fail if we were to sell through third parties, because third parties aren’t fundamentally as interested in selling electric cars as we are,” Diarmuid O’Connell, Tesla’s vice president of corporate development, told Connecticut Magazine. “Connecticut residents have to drive to New York or Massachusetts, and that’s an inconvenience,” says O’Connell. “They can also buy them online or over the phone, but this is a high-touch purchase. People want to be able to go in and literally kick the tires and drive the car.”
The bottom line is, franchise dealer laws are so over. In a couple years, people won’t even remember what all the fuss was about. Once Tesla kicks down the door, other manufacturers, including the Big Three in Detroit, will probably be only too glad to come thundering through.