Tesla Banning – It’s all about Service

tesla-store-new-jersey-banNew Jersey became the third state to ban sales of Tesla cars because they refuse to be part of the franchise system. Texas and Arizona have already instituted the ban based on the idea that in those states you are required to be a franchise in order to sell cars.

I wrote about this issue back in August and spoke about how this new model of selling cars hurts those who pay franchising fees and those who collect those fees. In short, politicians in many states have set up a system wherein anyone who wants to sell cars must pay a bribe to the state in order to have a license. Those who cannot afford the bribe or do not want to pay are not allowed to sell product to consumers.

There’s another aspect to the story. Car dealers make most of their money through service calls and financing, not sales. When people take their car to the dealer for routine maintenance and repair they pay a premium for such service. 

If the Tesla method of selling cars catches on; this lucrative form of revenue decreases dramatically. The loan portion of the industry is also severely damaged.

What upsets me most about all the caterwauling from the auto industry and franchise owners in various states is their insistence that they are banning Tesla sales to save the consumers. This is the sort of “it’s for you own good” Liberalism that drives Libertarians like me to drink.

What it really is, is another example of Crony Capitalism where those with money run to legislators and beg to be saved from a new competitor.

It could be that the franchise system is better for consumers. I doubt it, but it could be true. One thing that I know for certain is that it’s not the government’s business to decide what’s the best sales model for a car manufacturer.

We here in the United States don’t have the best cars, the best internet speeds, or the best technology because Crony Capitalism is destroying real capitalism. Are you happy with your internet provider? Your television provider? How many choices do you have? Choices are good for consumers and, in the long run, good for businesses.

In a capitalistic system a business must provide a good product at a price people want if they want to survive an assault from a vigorous new competitor.

In the United States the owner of a business simply heads to the statehouse and bribes the politicians into passing laws to destroy their competitors.

I have a word of warning for all the franchise owners who are trying to legislate Tesla out of business.

Elon Musk has a lot of money and bribery goes both ways. Maybe you should think about changing your business model. 

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Ideology
Current Release: The Spear of the Hunt
Next Release: The Broken Throne

5 thoughts on “Tesla Banning – It’s all about Service

  1. The problem with both electric and hydrogen http://qz.com/186432/why-hydrogen-powered-cars-will-drive-elon-musk-crazy/ fueled cars is that the require power plants to generate the fuel. The IC engine has an efficiency of about 25%. Coal and Natural gas fired power plants have an efficiency of about 30 – 40% Power plants are one of the largest sources of CO2 and other hazardous emissions. Replacements for the IC engine do theoretically reduce overall emissions if we assume there are no losses in transmission or storage which is unlikely. This neglects to take into account the current state of the interstate electric transmission grid which is over-taxed, over capacity, and under maintained.This means that a significant investment in infrastructure capacity upgrade (power plants and transmission grid) will be required for a marginal (at best) improvement in overall emissions. I fail to see the advantage in this approach. http://www.eia.gov/pressroom/presentations/sieminski_06052013.pdf

    This site disputes this line of reasoning; http://cleantechnica.com/2014/02/03/grid-capacity-electric-vehicles-actually-problem-studies-find/ but includes the following disclaimer on the site; The content produced by this site is for entertainment purposes only. Opinions and comments published on this site may not be sanctioned by, and do not necessarily represent the views of Sustainable Enterprises Media, Inc., its owners, sponsors, affiliates, or subsidiaries.

    • Thank you for the comment, Dale.

      My post was about Crony Capitalism, not the advantages or disadvantages of electric vehicles; but thank you for the information,


  2. My state, New Mexico, is about to call its very part-time legislature back into special session to come up with a proposal to persuade Tesla to open one of its production (and sales) sites here. About as far from Arizona’s attitude as to adjoining states could be.

  3. Pingback: Missouri Jumps in on the Tesla Anti-Capitalism Ban | tomliberman

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