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PHOTO CAPTION: Elon Musk addressing Texas legislators in Austin. Photo: San Marcos Mercury.

Tesla May Make Federal Case Out of Auto Dealers Restraint of Trade

Laws in 20 states prevent manufacturers like Tesla from selling directly to buyers.

Published: 18-Apr-2013

Tesla Motors is now fighting the Automobile Dealers Association in over 20 states, and is mulling taking the fight to the Federal level. A report by Automotive News quotes Elon Musk saying "If we're seeing nonstop battles at the state level, rather than fight 20 different state battles, I'd rather fight one federal battle."

The battle between Tesla and the Automobile Dealers Association is partly over the best model for handling car sales and service, and partly to do with the NADA attempting to maintain control and power. Laws in most U.S. States require that car sales occur through independent dealerships, and make other requirements that in sum result in the format of a modern car dealership. However, Tesla Motors uses a different model for selling its electric cars, a model where Tesla directly sells cars to the public and Tesla is the only organization that can service Tesla-manufactured automobiles.

Last week Elon Musk appeared in person before the Texas Legislature in support of a law, House Bill 3351/Senate Bill 1659, which would carve out an exception allowing companies like Tesla Motors to sell cars direct to the public. The argument made by Musk is that automobile dealers have "an inherent conflict of interest between selling gasoline cars, which constitute the vast majority of their business, and selling the new technology of electric cars." The reason being that explaining the advantages of electric cars undermines the sale of gasoline cars.

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