Tesla wins battle to sell its electric cars in Maryland, but more fights are coming...

Tesla showroom
Screen capture Google

Tesla has had to fight a protracted battle just to be able to sell its electric cars in the United States (it doesn't seem to be facing those problems elsewhere). For reasons that the company has explained previously (more on that below), the dealership model doesn't work for Tesla, but over decades, auto dealers have entrenched themselves thanks to armies of lobbyists, and have used laws that were originally intended to protect them from their suppliers (ie. protect GM dealerships against GM) to try to block Tesla in numerous states (for example: Texas, Massachusetts, Ohio, Michigan, New York, Missouri, North Carolina, etc).

Google/Screen capture

Each loss hurts, because it can sometimes take years to get laws reversed, and the only people who benefit in a state that blocks Tesla are dealers (so the ratio of winners to losers is maybe a few thousand people to tens of millions). But on the other side of the coin, each victory is important because it's probably permanent - in 10 years EVs will only be more mainstream, and the idea of blocking them will seem even more crazy than it is now - and because it helps turn the tide in other states. Everybody's paying attention to what is going on elsewhere, and nobody wants to be the backward village idiot when everybody else has found enlightenment.

So it's great news that Maryland has been added to the list of states where Tesla has found a way to sell its electric cars. The freedom to compete and operate in the state is not complete, but thanks to an exception for manufacturers and distributors with “only electric or non-fossil-fuel-burning vehicles”, the company will be allowed to act as its own dealer.

The new law, known informally as the Tesla Bill, will take effect October 1st and will allow four locations (another restriction, but since people don't buy a EV every day, having them go to a bigger city in the state is still not too bad compared to having them go out of state).

Google/Screen capture

“We hope this momentum combined with encouragement from independent entities, such as the Federal Trade Commission, will lead to direct sales in other states such as Connecticut, Michigan, Texas, and Arizona,” Diarmuid O’Connell, vice president of corporate and business development at Tesla, said in an e-mailed statement.

© Tesla

If you're curious about the reasons why Tesla doesn't want to have to go through third-party dealers, check out this blog post by Elon Musk explaining the situation. Here are some choice cuts:

Existing franchise dealers have a fundamental conflict of interest between selling gasoline cars, which constitute the vast majority of their business, and selling the new technology of electric cars. It is impossible for them to explain the advantages of going electric without simultaneously undermining their traditional business. This would leave the electric car without a fair opportunity to make its case to an unfamiliar public. [...]

By the time most people decide to head to their local dealer, they have already pretty much decided what car they want to buy, which is usually the same make as their old car. At that point it is largely just a matter of negotiating with the dealer on price. Tesla, as a new carmaker, would therefore rarely have the opportunity to educate potential customers about Model S if we were positioned in typical auto dealer locations.

That is why we are deliberately positioning our store and gallery locations in high foot traffic, high visibility retail venues, like malls and shopping streets that people regularly visit in a relatively open-minded buying mood. This allows us to interact with potential customers and have them learn about our cars from Tesla Product Specialists before they have decided which new car to buy.

All this is a bit surreal, though. The U.S. has a self-image as a place of entrepreneurship, free markets, and where high-tech companies are nurtured into world champions. The fact that one of the most successful U.S. tech companies, employing thousands of high-paid engineers and manufacturing experts, one of the first successful automotive startup in almost a century, is having to fight for the right to sell its products inside the U.S. just does not make sense...

Tesla/Promo image

Via Bloomberg

Tags: Electric Cars | Electric Vehicles | Maryland


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