- May 8, 2014
Missouri next state to attempt Tesla direct-sales ban
Tesla currently has one store in Missouri, in St. Louis (and wants to open another), but new language inserted into a bill that had previously been focused on off-road vehicles "would bar Tesla from selling its vehicles direct to consumers in the state," the automaker says. That doesn't seem like an exaggeration, since the bill explicitly states:
Tesla says the bill's new language passed the Senate last night, "after zero public consultation and could soon move to the House floor for a final vote, essentially without debate." Tesla wants to get a debate started, so it makes its point in bold terms. "To be clear: this is worse than a mere case of dealers trying to protect an existing monopoly – this is a case of dealers trying to create a monopoly," the company said.
In enacting subsection 3 of this section, it is the express intent of the legislature to prevent any manufacturer of new motor vehicles from circumventing the public policy as stated in section 407.811, by engaging in methods of retailing new motor vehicles which are designed to avoid the provisions of sections 407.810 to 407.835.
Recently, some officials at the FTC said they thought anti-direct sales rules were "protectionist," which at least hints that a possible change is coming. You can read Tesla's call to action for Missouri below.
We have just become aware of a last-minute attempt by the auto dealers lobby, via pressure on legislators, to use a procedure that would bar Tesla from selling its vehicles direct to consumers in the state. This extraordinary maneuver amounts to a sneak attack to thwart due process and hurt consumer freedom in Missouri.
In the last week before Missouri's legislature ends its current session, dealers proposed new language in an existing bill that would force Missouri consumers to purchase new vehicles only through middleman franchised dealers. The bill, HB 1124, has been in circulation since December 2013. It was passed by the House on April 17 without the anti-Tesla language. Last night, the bill with the new anti-Tesla language passed the Senate after zero public consultation and could soon move to the House floor for a final vote, essentially without debate.
This change is not an innocent, minor amendment. It is completely unrelated to the original bill, which was about laws regarding all-terrain vehicles, recreational off-highway vehicles, and utility vehicles. It is also a complete 180 from what the original bill proposed. The current statute only bars franchisors from competing against their franchisees (for example, Ford cannot compete against Ford dealerships).
Tesla complies with that statute because we do not compete with any franchise. Just as we saw in New Jersey, however, this bill amendment expands the scope of existing regulations well beyond their original intent. They are attempting to do so in part by redefining the word "franchisor" to mean "manufacturer", a pirouette of which the legislators may not even be aware. To be clear: this is worse than a mere case of dealers trying to protect an existing monopoly – this is a case of dealers trying to create a monopoly.
Officials at the Federal Trade Commission have already stated their support for Tesla's ability to sell vehicles direct to consumers. In a blog post, the FTC authors wrote: "Regulators should differentiate between regulations that truly protect consumers and those that protect the regulated." Separately, a letter signed by more than 70 leading economists under the banner of the International Center for Law & Economics soundly dismisses every dealer argument and concludes that these bans are only motivated by "economic protectionism that favors dealers at the expense of consumers and innovative technologies."
Tesla already has a Service+ center in St Louis, MO, at which we employ 15 people. We have invested $2M in the state so far. We plan to open a larger service center in Kansas City, MO, later this year, employing another 15 people and investing an additional $1M.
This debate should be held in the full light of day with all sides being given an opportunity to make their case. Instead, the dealers are again trying to ram through a provision under the cover of darkness and without public debate. The people of Missouri deserve better from their elected officials.
To speak out against this bill, contact your legislator.