Houston, TX, July 15, 2013 – The trouble for Tesla Motors Inc. (NASDAQ: TSLA) began with the source of their success: an innovative business model that is changing the way consumers shop for cars. Their luxury electric vehicles, beyond simple popularity for their design and performance, have sold quickly due to Tesla’s direct-to-consumer sales model, without using expensive franchised dealers as middlemen. This sales model has lowered the prices of Tesla’s products, making the company quite competitive, and extremely viable.
Car dealers, however, have begun to feel the pressure of Tesla’s rise to prominence, and are struggling to remain dominant in today’s changing market. What can they be expected to do, faced with this challenge? An intelligent company might improve its services. Another might lower its prices. Most would wait to see if the Tesla model truly was an improvement on their practices and adapt. All of these, however, would have been beneficial to the consumer and supported the free market. Unfortunately, quite the opposite is happening.
Fearing that they will not remain competitive in the wake of Tesla’s innovations, car dealerships across America have taken to the State legislatures, seeking unfair restrictions on the California-based company in a clear and worrying pattern of disregard for economic freedom and the spirit of competition.
Supporters of Tesla’s freedom to do business have managed to defeat such legislation before it was passed in North Carolina and New York, but elsewhere the situation remains bleak. In the state of Texas, employees at Tesla showrooms are forbidden by law to sell Tesla vehicles. They are forbidden to reveal the prices of Tesla vehicles. They are forbidden to tell customers the address of the company website, and if in spite of all this, a customer manages to complete a purchase by email or post, their vehicle must be delivered from outside the state, shipped in a truck which must not display any Tesla brands or logos. Tesla Motors now faces such restrictions in no fewer than 48 states.
Confronted with such extreme government interference with his business, Tesla CEO and titan venture capitalist Elon Musk is ready to take the fight onto the national stage. “If we’re seeing nonstop battles at the state level, rather than fight twenty different state battles, I’d rather fight one federal battle,” Musk told Automotive News in April.
In a campaign to answer this call to action that is making headlines around the globe, a fan-created White House petition to protect the California auto maker’s right to sell directly to consumers has this month reached the requisite 100,000 signatures needed to force an official response from the Obama administration. This groundswell of support and solidarity with Tesla’s plight has made all the difference for the company.
Even in the face of such dramatic repression, Tesla Motors is becoming a martyr for the free market. At the time of this writing, Tesla’s vehicles have been outselling and outranking established brands such as Nissan and Chevrolet, with its signature vehicle, the Model S, winning the 2013 Motor Trend Car of the Year. Today, the Tesla Model S is the top selling electric car in the whole of North America.
With the ball now squarely in his court, President Obama faces a choice. Will he cave to entrenched interests? Will he continue with politics-as-usual? Will he allow the free market to be infringed so boldly in America, the standard bearer of freedom and innovation in the modern world? Or will he stand with Tesla? Will he take up the charge for economic liberty, and set a precedent for free enterprise, where the success of innovators and entrepreneurs cannot be restrained by the spite of those who refuse to adapt? The choice is his.