Tesla Motors Inc (TSLA): Dealers In N.C. Don’t Like The Online Deal

Tesla Motors Inc (NASDAQ:TSLA), though 10 years old as a company, is still considered a startup as it is has only just in the last quarter made a profit, and it has made just one sedan – the Model S. (Does anyone remember the Roadster? That was the first Tesla model.) But it seems to be because of the recent profitability and the rave reviews of the vehicle has apparently started a wave of at least envy, at worst jealousy by those in the automotive industry.

And in the state of North Carolina, that is being demonstrated by retail dealerships – which seems to be trying to legislate  against consumer choice and the free market.

Though Tesla Motors Inc (NASDAQ:TSLA) provides a business model that allows for direct sales with customers through the Internet instead of through a dealership, but the North Carolina Automobile Dealers Association (NCADA) has successfully lobbied a bill through a state senate committee, which would ban the direct sale of automobiles in the state – which would mean that anyone in North Carolina would be prohibited from ordering a Tesla without it being sold at a dealership.

Image: Tesla Motors Inc (NASDAQ:TSLA)

No more delivery to the front door. Tesla did send representatives to the committee hearing to present the case for an open car-sales market in North Carolina, but the committee passed the bill onto the full Senate with a unanimous vote.

“We care about the franchise system,” said Robert Glaser, NCADA president. “The whole point of the retail system is to protect the consumer.” This argument is not meant to be against Tesla Motors Inc (NASDAQ:TSLA) specifically, the organization claims, but it is meant to protect the more than 7,000 dealerships in the state, the employees and others who are stakeholders to the success of that sector of the economy.

“They’re trying to insulate the dealer franchise model from any competition,” said Tesla vice president Diarmuid O’Connell, who gave a presentation to the committee before the vote. “It’s a protectionist move to lock down the market so we have to go through the middleman – the dealer – to sell our cars.”

What are your thoughts about this? Should this become law? Do you agree with the argument that a dealership protects the consumer? Can this set a precedent across the country against companies like Tesla Motors Inc (NASDAQ:TSLA) and their direct-sales approach? Let us know your thoughts about this in the comments section below.

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