Tesla Motors, the all-electric car company, is changing the car-buying business. Or, at least they are trying. Compared to the traditional way of buying cars from dealerships, they are selling directly to consumers. This new way of doing car business, while popular with consumers who appreciate not having to haggle for a good deal, is angering car dealerships, leaving them out of the process and threatening their old way of doing business.
As a result, dealerships, led by the National Automobile Dealers Association, are launching legal challenges and legislative attacks to stop Tesla’s success — in New Jersey, Arizona, Georgia, Texas, West Virginia, Colorado and many more states. Most recently, the battle has ramped up in North Carolina. Tesla successfully fought off a ban on their sales in the 2013 legislature, but now they face additional challenges as they try to expand the business (they currently operate one NC store and service center in Charlotte and a service center in Raleigh). Last week, the North Carolina Department of Transportation (NC DOT) held a hearing to determine whether they should authorize Tesla a second license to do business in the state. Unfortunately, NC DOT failed to allow for public comment during the hearing and some North Carolinians are not happy.
Race car driver and Tesla owner, Leilani Münter, took to the Internet after the hearing to express her frustration. Below is her letter, originally posted here, that we’ve posted below with her permission. SACE is a strong supporter of expanding electric vehicle use and open public processes. We hope North Carolina reconsiders its position on Tesla and supports the economic benefits of expanding their business in the state. Anne Blair, the Clean Fuels Director for SACE, provided the introduction for this blog.
May 3, 2016
To: Mr. Kelly J. Thomas, DMV Commissioner
To: Mr. Larry B. Greene, Administrative Hearing Officer
Dear Mr. Thomas and Mr. Greene,
I would like to thank you, Mr. Greene, for agreeing to take my testimony in written form since you were not able to take public comments today. I attended the hearing today because I felt it was important for someone from the public to speak; after all, it is the residents and consumers of Charlotte, North Carolina, who will be directly affected by this ruling.
I came to this hearing today to stand up for what I believe to be true and right. I will start by saying I am both a resident of Charlotte, North Carolina, and a Tesla Model S owner. I have driven over 35,000 miles in my Tesla Model S since purchasing the car in 2013. The service team at Tesla has been fantastic, and I couldn’t be happier with my car.
I have never been good at haggling over prices (I find it to be a completely miserable experience), so there was a great deal of relief on my part, as a consumer, knowing that when I purchased my Tesla I was paying the exact same price anyone else in the world would pay. I am certain that in my car purchases previous to my Tesla purchase, I did not get a good deal due to my lack of bartering prowess. By purchasing my car directly from Tesla, I didn’t have to worry about getting ripped off.
Ironically, my last car was a Volkswagen which was taken care of by Keffer VW, one of the four auto dealers that the attorney Mr. Mercer is here to represent. Keffer VW tried to sell me on their “clean diesel” brand several times. Thankfully I have a degree in science and using my knowledge, I decided to go electric. As we all know now, there was nothing “clean” about their “clean diesel” cars, and VW is facing severe punishments for lying to the public.
I find it sad that the North Carolina Department of Transportation would even consider making it difficult for Charlotte residents to purchase an American-built, Motor Trend Car of the Year that has sourced from over 30 manufacturers in North Carolina.
Free market economics is touted by conservatives, and yet almost routinely now we are seeing legislation being introduced across the United States designed solely to block the competition that Tesla is bringing to the old guard. Has everyone forgotten that it is unconstitutional to regulate interstate commerce?
The National Auto Dealers Association is lobbying to stop Tesla’s direct sales model. These are the guys who have been selling us gasoline-powered cars since — well, since we were born. Their chairman once stated that NADA “has a whole mess of lawyers in Washington” to defend their franchise laws and prevent Tesla from selling cars directly to customers. He added “NADA has serious concerns about Tesla’s intentions.” I can tell you what Tesla’s intentions are: to sell an American-built electric car to those who want them, in the United States and abroad. It’s pretty simple.
NADA has argued that Tesla selling directly from the manufacturer to the customer is “unfair competition.” It is the same sales model used by Apple Computers and Ikea’s furniture, so why should cars be any different?
If we believe in letting the free market decide, then the market has spoken, and it likes Tesla. If Tesla has produced a better product and found a better sales model that consumers prefer, then the free market is stating very clearly: the competition needs to improve.
NADA has also stated that blocking Tesla “protects consumers.” How is forcing the residents of Charlotte to drive to Raleigh or Atlanta to purchase a car protecting us? The truth is, of course, that these laws are not protecting the consumers — they are protecting the auto dealers.
This is about so much more than this one sales license in Charlotte, North Carolina. This is about something much bigger. Ask yourself: what happens when two of the most powerful industries in the world — oil and the established car industry — feel threatened for the first time? These two giants have been in bed with each other for a century: “You drill for the oil, and we’ll make the cars. Together, we’ll make a fortune. Even if the people hate us, they will have to use our products because they will have no other choice.”
For so long these folks in the automotive business, at car dealerships and the oil and gas industry, have been able to make up their own set of rules; rules that, when you look closely, are designed to make them richer at the expense of the consumer. And now along come companies like Tesla and they are re-writing the rulebook and guess what? Consumers are taking notice and liking this new playing field.
When competition is limited, consumers lose — the Federal Trade Commission has chimed in on this multiple times in various states agreeing with Tesla’s positions. North Carolina has no right to refuse Tesla’s sales license and make it difficult for Charlotte residents to purchase the most successful electric car brand in the world, which also happens to be made in America.
The result of this hearing should reflect the will of the people of North Carolina, who have shown overwhelming support (97%) for Tesla’s right to sell cars in our state. We, the residents North Carolina, will not allow our state to get away with this corruption of democracy.
Morgan Stanley has called Tesla “the most important car company in the world,” and they are correct. It is essential for humans to evolve to more sustainable ways of living on this planet in order to not destroy the world around us. A key part of this evolution is the move to sustainable transportation in the form of electric cars powered by renewable energy. State laws blocking Tesla from selling electric cars stand in the way of that evolution. Think very carefully about which side you are going to be on, for this will be the legacy you leave for your grandchildren.