10.23.2014 0

Tesla blocked by bipartisan cronies in Michigan

teslaBy Tom Toth

Tesla Motors, the American car maker created in 2003 by “engineers who set out to prove that electric vehicles could be awesome,” has been banned from opening stores in Michigan to advertise and sell its vehicles.

The “anti-Tesla” bill prevents auto makers like Tesla, who set up shop exclusively through regional stores and sell directly to the customer, from cutting out the middle man when competing with established car companies selling through the traditional franchised dealerships.

The new law, pushed unsurprisingly by General Motors and car dealer associations, was signed by into law by Michigan Governor Rick Snyder after passing the state legislature with a single dissenting vote.

This important, anticompetitive law proves exactly why Michigan automobile innovation is dying at the hand of bipartisan cronies unwilling to allow auto makers adapt to a new business environments.

Arguments in support of the law are silly when put to the test of common sense. Proponents of the ban most often say that car dealerships are best for the consumer because the inherent competitive nature of inter-dealership relationships and that a company selling direct would have too much negotiating leverage over buyers.

So imagine a company (say, for instance, a major tech company named after a popular fruit) that designs and sells a high-end product that never goes on sale while competing with products sold primarily through third-party retailers. Yet, somehow, the same proponents of anti-Tesla laws across the country haven’t signed on to legislation banning Apple from doing the exact same thing by selling Apple products and merchandise through the Apple Store — because it would be ridiculous government interference.

Yet, for some indiscernible reason, automobiles are deemed a transcendent product that can only be sold by big government-approved, traditional means of franchised dealerships.

“Tesla is selling a new product with a new technology,” the company said of the new law in a statement. “The evidence is overwhelming that a traditional dealer-based approach does not work for electric cars.”

Further, Democrats who support this bill betray the global warming alarmism religiously adhered to by members of their party. Kill off the coal industry? No problem. Allow fully electric cars to be sold directly to drivers so that an electric car company can take market share from the gas-guzzling competition? No way!

Republican supporters betray the limited government, free market principles they claim to support. The automobile industry may be on the cusp of dramatic change, and they of all parties should understand the damaging nature of government interference for special interests. But for those concerned first and foremost with special interests, donor dollars from GM will flow far deeper than any Tesla contributions for Michigan state legislators.

The bottom line is that government should have no business telling companies like Tesla, who are innovating and risking tens of billions of dollars in the auto market, how they should conduct their business or sales strategies.

Consumers benefit far more, especially in the long term, when industries explore diverse methods of attracting the consumer’s dollar. Special interests (GM, Michigan dealership associations) will spend millions to maintain the status quo, telling consumers that their vice grip on the market is what’s best all the way to the bank. It’s up to the people’s representatives to know better.

Tom Toth (@TomToth3) is the digital content director and a contributing editor for Americans for Limited Government.

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