Tesla Motors Inc (NASDAQ:TSLA) direct sales model is being banned in states run by Republicans even though most of the politicians in these states claim to support the GOP’s free-market rhetoric. Michigan was the fifth state after Texas, Arizona, New Jersey and Maryland to pass a new law that restricts car manufacturers from selling their cars directly to the public.
Republicans favoring auto lobbyists
Four of the five states that have banned the Tesla direct sales model have Republican governors, and three have Republican majorities in both houses of the state legislature. Catherine Rampell stated in an op-ed for the Daily Local News on Tuesday, “Allegedly free-market, anti-protectionist Republican legislators and governors… have been doing their damnedest to protect auto dealers from the threat of competition.”
Rampell mentioned that it is not clear what issues these laws are trying to solve, and why selling cars directly to the customers will be so offensive. Rampell thinks that Republicans are under huge pressure from auto industry lobbyists as they receive hefty donations from the industry.
In Michigan, a report from Road and Track stated that law to ban direct sales was added as an amendment in the very last minute by a Republican state senator to avoid any sort of public comment or debate over the issue. Governor Snyder ruled out any possibilities of restriction on the direct sales by the bill saying that such strategy is already prohibited under Michigan Law. Road and Truck reported that the bill had minor modification in the current law, and was also praised by the press release of General Motors.
Similar case for Tesla in New Jersey
Power Nation reported that the restriction on direct sales was exercised by the New Jersey Motor Vehicle Commission, which is headed by the political appointees of Republican Governor Chris Christie. Moreover, Christie promised the matter would be voted on in the legislature.
However, Tesla received support from Texas Governor Rick Perry, who spoke against the ban on the direct sales model. He said that the old rule that restricts carmakers from selling directly to the public should be revised, suggesting that such amendment would make a strong case for Texas in the competition with Arizona to host a new Tesla factory.