Tesla Actually Strikes a Blow Against the Corporate State

Tesla Motors and Elon Musk, the folks who seem to perennially have their hands out for special government favors and taxpayer money, may have actually struck a small blow against the corporate state:

Tesla Motors Inc. says it’s won another round in its fight with established car dealers who want to stop the company from selling its electric luxury cars directly to consumers.

Tesla CEO Elon Musk says, via Twitter, that a New York judge has tossed out a suit brought by New York auto dealers who challenged Tesla’s direct sales model as a violation of the state’s franchise laws.

Mr. Musk spent Wednesday in Texas making the case for a legislative proposal to change the law to allow direct sales of electric vehicles by U.S.-based manufacturers.  Texas car dealers have opposed the measure, saying it would open the door for other car makers to sell electric cars direct to customers –  which could undermine the value of their franchises.

Government protections of middle men in the auto business (states generally do the same in the liquor business) are a classic example of crony capitalism.  Car dealers tend to have a lot of sway with politicians, not to mention with local media for who they are generally the largest advertisers, so they are able to engineer special privileges for themselves.  Congrats to Tesla for taking this on.


  1. Joshua Vanderberg:

    I had no idea cars were a special protected class of retail items. It makes no sense to me that I am not allowed to go online and purchase a car directly for delivery. I mean, most likely I'd prefer to actually see the car and test drive it - but I'd be perfectly willing to pay a fair market value for a sales-person's time in demonstrating the car to me and then order online.

    But maybe I've already driven my neighbor's car and am decided. What value does a trip into the dealership add? Can't they be satisfied with screwing me every time I come in for service?

  2. Allen G:

    I'd love to see Zappos do for cars what it did for the shoes. Ship me my new car with free two-day delivery. If I don't like it, I can ship it back for free.

  3. Rafael Fonseca:

    It makes no sense whatsoever that such sales should be limited. I wondered why the display's were such at our mall. I will pay for my Tessla with Bitcoins!

  4. marque2:

    Car manufacturers should set up car demo shows, can just go and get a test drive, and then order.

  5. Joshua Vanderberg:

    Or arrange to rent a similar model from a rental car agency.

  6. MingoV:

    I cannot congratulate Tesla for fighting government regulations that go against its own interests. It's good that cronyism is being challenged, but Tesla isn't doing it for our benefit.

  7. David:

    I thought "enlightened self-interest" was okay?

    Here, they're doing the right thing. We should thank them. If they do the wrong thing later, we should oppose that then.

  8. jdgalt:

    Cars ought to be sold like lawnmowers. Pick one out, check out, and go. Of course this would mean most of them wouldn't come with warranties, but then, a lot of Chrysler and GM owners who thought they had warranties were left high and dry after the bankruptcies anyway.

  9. HFB:

    I was curious if these laws (which seem to be protectionist crony-capitalism) came about from dealers setting up in a community and the MFR coming in later to undrcut them and drive them out of business. In other areas, most MFRs want the end user to get the best support and realize that the dealers are value added retailers. If the MFRS do decide to sell direct to the public, they sell at MSRP only (they tend to direct the buyers to specific retailers to shop around).
    I would think that this isn't new in the history of the world and good business men and women would make sure that their franchise/dealer agreements include these protections from the get go. Seems better to create contracts between each other with enforceable actions then to make a protectionist law reducing competition and increasing costs. Reminds me of the laws in some states prohibiting sales on Sundays for all dealers since the conected ones didn't want to have to be open in order to compete.
    I think those that want to buy direct at a lower cost would also have to realize that the dealers are the ones who started the process and they should have solid agreements that protect their share of profits. If MFRs had started this from day one, we wouldn't be paying the middle man now. I think some MFRs did this already...