Tesla fights to sell cars in some states
When Tesla Motors Inc., the high-end electric carmaker, wanted to set up shop in West Virginia, it ran into a serious roadblock: car dealers.
Tesla sells its cars directly to consumers through stores operated by the carmaker. That leaves dealers out of the mix. And in West Virginia, like many other states, they're a powerful political force. After car dealers weighed in strongly against Tesla's plans, the state in 2015 joined four others — Connecticut, Michigan, Texas and Utah — that ban direct retail sales of Teslas and any other autos sold directly by a manufacturer.
The company has been allowed to open stores in about 20 states. Some states, including Maryland, New York, Ohio and Pennsylvania, have approved laws affirmatively allowing direct-to-consumer auto sales, which lets Tesla open stores and sell its electric cars. Maryland limited the outlets to four in the state, however. Several other states have limits, though many do not.
Tesla, the brainchild of Elon Musk, an innovator who also heads SpaceX, which makes private rockets and spaceships, hasn't actively tried to sell its vehicles in the other half of the states.
The reasons for the restrictions vary, but they all stem from 1930s-era laws that were aimed at prohibiting big manufacturers like Ford and General Motors from selling directly to consumers and bypassing dealerships. The fear was the big manufacturers would undercut the dealers on prices, drive them out of business and lessen competition.
Since then, more car companies have sprung up across the globe and their dealers have become politically powerful — hiring many people, contributing to charities, paying property taxes, and collecting state and local sales taxes and fees.
Car dealers also contribute to political campaigns. And across the country, they have worked to keep out direct manufacturer sales, which means nearly all new cars, foreign or domestic, sold in the U.S. are sold through dealers. Popular foreign carmakers such as Toyota, Volvo and Honda have partnered with many dealers to sell their products, so you get dealers that sell, say, both Fords and Hondas.
Tesla has sold about 58,000 cars in the United States despite the $70,000 price tag. The company faces many challenges, such as persuading consumers to spend that much and to buy electric vehicles, and getting enough charging stations up and running across the country. But selling cars the way it wants is also a big issue.