North Carolina May Ban Sale Of Tesla Motors’ Cars

North Carolina may ban the sale of Tesla Motors’ vehicles in the state, citing fairness of competition as a reason. More like trying to stifle innovation and offering consumers an alternative to the entrenched car dealership lobby.

There is a clear pattern of opposition to car manufacturers selling their cars online, which avoids the services of automobile dealers associations, and yes, the opposition comes from automobile dealers associations.

Virginia already banned the sale of Tesla vehicles online, though Massachusetts and Minnesota defeated similar bills, allowing the direct sale of Tesla vehicles to consumers.

Some think that this ban was to prevent Tesla Motors from evading taxes and franchise laws. If that is what the NCADA was concerned about, then they would have simply pushed for the amendment of online sales to their tax and franchise laws, but the NCADA said it was to prevent “unfair competition”. In other words: Prevent Tesla Motors from evading the dealers themselves.

Apart from that, it may not necessarily be true that online car sales are exempt from taxation.

A major incentive for this ban is that Tesla Motors would have to sell cars through automobile dealers, making the dealers more money. Some would consider this anti-competitive because Tesla Motor’s own business model competes with the traditional dealerships model, which has a very powerful lobby in many states. Texas is currently considering similar legislation, and could prove the tipping point one way or another for Tesla’s national efforts.

On the other hand, there is an argument that forcing car sales through dealerships actually benefit consumers in the long run. With so many competing dealerships offering essentially the same product, price and service  becomes the main selling points. There is an argument for both sides, though trying to force Tesla to adopt a dealership model seems certainly unfair. Passing legislation aimed directly at a company is just sour grapes.

According to Slate, a reason cited by dealer associations for this is the protection of consumers.

There is a saying that goes “people’s views often coincide with their own interests”. So far, we have found no way in which banning Tesla Motors from selling its own cars directly (which has the potential to save customers money by eliminating the middle man) would benefit North Carolina’s economy.

Source: Slate