Tesla and the Red‐State Blues
In red‐state America, the free market is king, right? Progressivism, socialism, the nanny state – those are fightin’ words. And what state could be redder than Texas? Well perhaps it’s still true that liquor’s for drinking and water’s for fighting in Texas, but water isn’t the only thing some Texans think worth fighting for. Legally‐protected – read “unfree” – markets are another.
It seems that the folks who make these new‐fangled electric cars – Tesla Motors, in particular – have a different sales and service model than traditional manufactures have had since the days of the Model T. As CNN Money explains, under the conventional model, manufacturers
sell cars to independently owned and operated dealers or distributors who, in turn, sell them to the public, usually after some negotiation over the final price.
By contrast, Tesla’s showrooms, of which there are already 37 around the country, are owned and operated by Tesla Motors. Most of the showrooms are in shopping malls with only enough cars kept in inventory for display and for test drives. Also, there’s no haggling. Every Tesla car sells at full sticker price. Service on the cars is performed at separate garages, also owned by Tesla.
Now I hold no brief for these cars or that sales and service model. In fact, I rather like my gas‐guzzler, to say nothing of haggling. But I also like the free market, and that’s precisely what Bill Wolters, president of the Texas Automobile Dealers Association, seems not to like. If Tesla chief executive Elon Musk “wants to have a showroom in a mall, that’s fine,” Wolters said, “but he can’t own it.” Fearing that the Tesla sales and service model might encourage other automakers to try it, Wolters is fighting to keep in place the Texas law that prohibits automaker‐owned dealerships. Under that law, Tesla can’t sell cars in Texas.
Tesla has showrooms there, but employees can only show off and explain the car. They can’t give test drives or take orders. They can’t mention the price at all, even if customers ask. The current law doesn’t stop anyone in Texas from ordering a Tesla Model S online if they want to. Tesla just can’t deliver it to the customer. The buyer has to arrange for delivery through a third‐party shipping company.
And if you think Texas is bad, in North Carolina – another traditionally red state, despite the close presidential race in 2012 – dealers are pressing for a law that would make it illegal even to sell cars online in the state, something that’s currently legal in all 50 states.
We’ve seen this movie before, of course, with occupational licensure, consumer products, and so much more. And invariably it comes down to the same thing: the folks in place don’t like competition from the new kids on the block, so they run to the legislature for protection. Come on Texas (and North Carolina), practice what you preach. You’re making the blue states look good, and no self‐respecting Texan wants that.
