Tesla’s success with its “Model S” electric car has made the company a strong competitor in the auto industry. However, due to recent franchise laws, Tesla may face its biggest political obstacle yet.
Since last year, Tesla was looking to establish a retail facility in West Virginia because of its ideal location. Bordering Virginia and Pennsylvania, West Virginia would be a convenient location to potential costumers in stronger electric markets. However, Governor Earl Ray Tomblin signed a bill on Friday that prevents Tesla, a non-franchise company, from carrying out direct sales in West Virginia. Senate President Bill Cole, who happens to own a Nissan auto dealership himself, supported this bill as well.
The bill states that vehicle makes may not “act in the capacity of a new motor vehicle dealer” or “operate a dealership, including, but not limited to, displaying a motor vehicle intended to facilitate the sale of new motor vehicles other than through franchised dealers, unless the display is part of an automobile trade show that more than two automobile manufacturers participate in.” This means that only is Tesla restricted from selling its cars in West Virginia, but it’s also not allowed to host Tesla “galleries”, which will really harm Tesla. These galleries, which do not conduct sales, are a strong addition to the company’s online-based market. Potential buyers can go to these galleries and receive information from Tesla employees, see the cars in person, and even take test-drives.
Even though online shopping is becoming favored over retail stores, I believe that American consumers still value the ability to experience a product in person before purchasing it online. That is why I believe that these bills, which are now enact in West Virginia, Michigan, and New Jersey, will really harm the potential prosperity of Tesla Motors. Tesla is trying to revolutionize online consuming by still providing costumers the ability to experience its cars in person, but as the company is seeing, the auto industry is afraid from straying away from franchises, and it is backed by political constituency. That’s American Democracy for you.