North Carolina might ban Tesla’s business model
North Carolina lawmakers are rushing to protect the state’s car dealers from Tesla’s subversive direct-to-consumer business model.
Silicon Valley-based Tesla sells its all-electric roadsters and sedans online and over the phone. It seems to be doing a pretty good job of it so far. It doesn’t sell its cars on the concrete lots or in the sterile showrooms of car salesmen, who take commissions that hike prices. The company considers dealerships unnecessary.
And that rubs the powerful North Carolina Automobile Dealers Association the wrong way.
The association wants a piece of the Tesla pie, and it’s accustomed to getting its way. State law already bars anybody other than a licensed dealer from selling more than four motor vehicles in a year.
The association has backed Senate Bill 327, sponsored by state Sen. Tom Apodaca (R), which would broaden the scope of that protectionist law to also cover internet and telephone sales.
The whole misunderstanding would go away, the dealers say, if Tesla sold its cars through licensed dealerships. [Tesla Business Development Vice President Diarmuid] O’Connell countered, in essence, that displaying a Tesla in a showroom of subcompacts and SUVs would be akin to selling Dom Perignon in the food court at the local mall.
But it’s not Tesla per se that worries the dealers. It’s the precedent. The prospect threatens the livelihood of North Carolina’s 7,000 licensed dealers, who invest millions in building big lots and showrooms to efficiently move product, say supporters of the bill.
“We care about the franchise system,” said Robert Glaser, president of the N.C. Automobile Dealers Association. “The whole point of the retail system is to protect the consumer.”
The local dealer is the customer’s point of contact on malfunctions, defects and recalls, Glaser said. Automakers are designers, manufacturers and wholesalers that remain largely invisible to the car buyers, he said.
“You tell me they’re gonna support the little leagues and the YMCA?” Glaser asked, directing his glance at the Tesla contingent milling about a few feet away in the legislative building.
Oh, snap back atcha, out-of-town tech company.
The North Carolina Senate’s Commerce Committee unanimously approved the legislation last week. Apparently, not a single committee member saw a problem with passing a law that would force a company to incorporate an old-fashioned and costly middleman into its business model.