Tesla Motors doesn’t sell cars the same way other automakers do, but in Texas and Virginia they can’t do so… by law.
The problem is that Tesla Motors doesn’t have any dealer franchises. That way, they can maintain control over pricing and marketing strategy. Many states have laws that ban automakers selling directly to the consumer, because a dealer would never be able to compete against the manufacturer.
At first blush, one might look at the Tesla Motors sales strategy and think the law does not apply. After all, Tesla Motors has no dealership franchises to compete against. It’s a funny argument to make, since there isn’t a single automobile anywhere on the market that even comes close to the Tesla Model S as a luxury electric vehicle. Why are all the dealership associations up at arms over one automaker? Is maintaining the status quo of more merit than fostering healthy competition in the marketplace?
Apparently so, as lawmakers in some states have rejected Tesla Motors‘ appeal to be allowed to sell directly to the consumer. Virginia, in April, did just that. Tesla Motors has been wooing Texas, but it seems that the Texas Legislature hasn’t even brought it to the floor for debate yet. For now, the fight in Texas is over until they reconvene, in 2015? Needless to say, I’m certain this comes as a major disappointment to Tesla Motors, although they have not yet commented on the matter.
Interestingly, other states have approved Tesla Motors selling directly to the consumer, most notably in New York, Massachusetts and Minnesota, but the fight is far from over. Tesla Motors currently has Tesla Stores in ten states and Tesla Galleries in another four states. What’s the different between a store and a gallery? Tesla Stores show and sell the Tesla Model S, while Tesla Galleries merely show the Tesla Model S.
In a state like Texas, where Tesla Stores are still illegal, prospective clients can still check out a Tesla Model S at a Tesla Gallery. At a Tesla Gallery, prospective buyers can look at the vehicle, ask questions, but you can’t take a test drive or discuss financing. According to the Tesla Gallery located in Austin, TX, “Tesla at The Domain brings our revolutionary retail concept to the Austin. The Gallery does not sell cars, but serves as a place to educate visitors about our groundbreaking electric vehicles.”
You can still buy a Tesla Model S, even if you aren’t in a Tesla Store or even in a state that has a Tesla Store. Thanks to the power of the internet, you can just buy a Tesla Model S online and have it delivered to you, maybe even your doorstep? Sadly, even South Carolina is actually seeking to ban internet sales of the Tesla Model S, so who knows if that will be another way to keep Tesla Motors from selling?
Fortunately, you can still cross state lines and buy a Tesla Model S, unless legislators decide you can’t register a Tesla Model S in the state. Is that where all this is heading? Because Tesla Motors hasn’t gotten satisfaction on some of its bids to sell directly to the consumer via Tesla Stores in various states, they may seek a Federal lawsuit in order to set the matter straight. As it is, Tesla Motors is losing a lot of money on failed lawsuits, but this isn’t impacting sales in the least.
