Tesla demands right to sell cars to drivers


A petition calling for an end to state laws that prevent Tesla selling electric cars direct to the public has attracted more than 100,000 signatures on the White House website. That’s enough to trigger a mandatory response from the government, though doesn’t guarantee any specific action.

The petition relates to laws in several states. Most states ban automakers from opening their own dealership in the state if that would mean competition for franchised dealers. As Venturebeat explains, such laws commonly date back to the middle of the 20th century, when states worried that automakers would drive smaller dealerships out of business. States have also argued that requiring franchising gives a better chance of price competition for consumers.

However, some states have laws worded in a different way that specifically bans any car manufacturer from selling directly to the public. In some cases, if a customer living in a state does buy a car from the manufacturer, the manufacturer must physically move the car in from another state before handing it over.

All these laws are problematic for Tesla, which prefers to deal directly with the public (partly because it fears dealerships won’t push electric vehicles as hard when they share a lot with traditional gas-powered cars.) It argues that the rules aren’t appropriate for its set-up which usually has only a handful of cars on display and for test drives, with the customer placing an order for manufacture rather than buying a car on a lot and driving away.

Tesla has considered taking action in a federal court to try to get such laws declared invalid because they unfairly constrain interstate trade. The company believes such an approach is simpler than taking on each state law locally, one by one. However, it’s also backed the petition, which reads:

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.

Exactly what the federal government could do, even assuming it’s sympathetic to Tesla’s arguments, isn’t entirely clear. It would be problematic to say the least to try to force individual states to change their laws. One theory is that the Obama administration might give public backing to the idea of Congress introducing a new federal law that would specifically permit direct selling of electric vehicles.