Tesla Motors Inc (TSLA) Takes On The Car Dealers

Posted Jun 27, 2013

Tesla Motors Inc (NASDAQ:TSLA) is known for selling electric cars directly to consumers.  Car dealers do not like this because they do not want to face competition of direct sales for new cars.  Tesla depends entirely on direct sales.  Now Tesla stockholders are petitioning the White House to prevent states from blocking direct sales of vehicles.

Tesla can legally sell new cars directly to customers in every state except for Texas.  Car dealers in New York and North Carolina are making it more problematic for Tesla to sell cars directly to the public.  The politicians in state legislatures are helping car dealership organizations push this legislation.  One of the car dealer organizations includes the National Automobile Dealers Association.

Tesla has an advantage by not having local car dealerships.  Car dealerships can have quite a large amount of overhead.  The car dealers may feel pressured to make their prices more competitive.  Car dealers emphasized that their existence prevents large car companies from colluding on prices.  This would cause cars to be more pricey for everyone.  However, there are some economists that believe the current business model of third-party car dealerships causes price increases.  A Tesla stockholder in Stow, Mass. launched a petition on June 5th on the White House “We The People” website.  The petition is asking the president to grant Tesla Motors permission to sell directly in all 50 states.

This petition has hit 28,813 signatures and it needs to hit 100,000 by July 5th.

“States should not be allowed to prevent Tesla Motors from selling cars directly to customers. The state legislators are trying to unfairly protect automobile dealers in their states from competition. Tesla is providing competition, which is good for consumers,” states the petition.