Tesla is prohibited from selling its cars direct to members of the public in several states by so-called “franchise dealer” laws. They were originally enacted decades ago to protect car dealers from rapacious manufacturers, who would often cancel a dealer’s franchise without notice or permit a competitor to open a dealership next door or across the street. But the laws have changed over time to become little more than a way of protecting dealers from competition. In many states, the local franchise dealer associations have more power with local legislatures than the manufacturers do.
When it first began, Tesla decided it wanted to sell its cars itself. It claims that electric cars are inherently different than conventional cars and marketing them requires an educational approach with consumers, many of whom are not familiar with what makes an electric car different. For the traditional dealer, the process is more of a “Wham! Bam! Thank you, ma’am!” experience. What color do you prefer? What equipment do you want? Sign the sales agreement run them into finance, and send them on their way. Typically the only education on offer is what is known in the trade as the “Three C’s” delivery process. It goes like this: See your car? See your keys? See ya later!”
Salespeople are encourage to spend as little time with each customer as possible in order to sell more cars. Compensation is often pegged to how many deliveries each sales person makes each month. The whole process is designed to move speedily from beginning to end. (Full disclosure time: I worked in the car business for a number of years, although my experience was with Saturn, a company that genuinely tried to do business in an ethical fashion using a consultative sales model. But I saw plenty of examples of how the traditional business works. Trust me. I know whereof I speak.)
Tesla has been trying for years to gain admission to critical markets in major states like Michigan and Texas but has been blocked at every turn by powerful dealer organizations. And its not just dealers. General Motors has been particularly aggressive at opposing many of Tesla’s initiatives. Michigan, of course, is home to all three legacy car companies — Ford, GM, and Chrysler. Together, they exert a powerful influence over the state’s government from the governor’s office on down. Just last week, Michigan’s Secretary of State, Ruth Johnson, rejected an application for a dealer’s license filed by Tesla Motors. That apparently was the last straw.