Reuther Ford in Herculaneum is leading the next round of the multi-year fight by Missouri auto dealers (as in many other states) against the Tesla car company and its direct-to-consumer sales model, reports the Missouri Times. Reuther, along with two other plaintiffs, is suing the Missouri Department of Revenue (DOR), demanding that it not give Tesla a license to sell cars in the state. This is an example of a special interest using its influence with government to quash a competitor that threatens to shake up an entrenched industry.
[DOR] granted Tesla the ability to sell direct-to-consumer in 2013, causing an uproar from the dealer industry due to the requirement that they sell through franchise laws laid out in state statute. A legislative fix was attempted in 2014 in the final days of the legislative session, but ultimately failed.
And this from the dealers:
The Act specifies that car sales “shall be administered…without unfair or unreasonable discrimination or undue, preference or advantage, “protection against irresponsible vendors and dishonest or fraudulent sales practices,” and “a stable, efficient, enforceable, and verifiable method for the distribution of motor vehicles to consumers in the State”
These type of restrictions on competitors are always couched in consumer protection when they are actually about special interest protection. And isn’t it rich that car dealers are worried about “dishonest or fraudulent sales practices?” What is the reputation of car dealers? Physician, heal thyself!
Here is the statement from Tesla, which makes electric cars:
“Today’s lawsuit is a desperate attempt to prevent an innovative company like Tesla from bringing products directly to market,” said Diarmuid O’Connell, Tesla’s VP of Corporate & Business Development. “Missouri law is very straightforward in that it prohibits manufacturers that use independent franchisees from competing directly against them. This has nothing to do with Tesla, which has never used independent franchisees. The fact that MADA tried and failed last year to change existing Missouri law to make it apply to Tesla, proves the frivolousness of this legal challenge.
“The goal of both this lawsuit and anti-Tesla legislation is to create a distribution monopoly that will decrease competition, hurt consumer choice, and limit economic investment in Missouri. We will continue to oppose these efforts to advance anti-free market regulations both in Missouri court and in the legislature.”
This on Tesla sales practices is from Wikipedia:
Tesla operates stores or galleries—usually located in shopping malls—in 22 U.S. states and Washington DC. Customers cannot purchase vehicles from the stores, but must order them on the Tesla Motors website instead. The stores act as showrooms that allow people to learn more about Tesla Motors and its vehicles. The galleries are located in states with more restrictive dealership protection laws, which prevent discussing prices, finances, and test drives, as well as other restrictions.
Here’s a good op-ed from a Show-Me Institute researcher on the case for Tesla.
It is unfortunate to see a local dealer leading the anti-free market, anti-competition side of the fight.