One of the big advantages that Tesla Motors Inc (NASDAQ:TSLA) has in the auto market is the cooperation of the government on a state and federal level. The government subsidizes the purchase of every single Tesla Model S. The company needs more from the government, however. Tesla Motors Inc (NASDAQ:TSLA) needs the US government to cut the power of car sellers.
The fight has been one of the main themes associated with Tesla since the start of 2013. Since the company showed financial stability in its first quarter earnings report, analysts have begun to look at other market themes that may be affecting its future. The fight with car dealerships has been chief among them.
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Tesla Motors Inc (TSLA) Cant Sell Cars In Texas
Right now, Tesla Motors Inc (NASDAQ:TSLA) can’t sell cars in Texas. Auto sales laws, which are mostly decided by states, prohibit car manufacturers from selling directly to consumers in Texas. In other states, or at least those that make it legal, Tesla owns and operates showrooms that sell its cars.
Tesla Motors Inc (NASDAQ:TSLA) wants the process of buying and selling a car to be as easy as possible. The laws concerning car sales stem from two different issues, attempts to avoid monopoly in car sales, and the power of dealership associations to sway local laws. It is the second of these that seems the greatest hurdle in the Tesla fight.
Customers in Texas are allowed to order the cars online as they are in the other fifty states, but Tesla is not allowed to deliver the cars. The laws in Texas, and those in some other states, cut into Tesla’s profits, and those profits are meager enough right now. Tesla Motors Inc (NASDAQ:TSLA) wants to change these laws, but it’s fighting against a tough crowd.
The Automobile dealers associations have several arguments in the chamber, haggling is better value, dealerships serve customers better, and protect them, competition on retail improves value. Tesla Motors Inc (NASDAQ:TSLA) wants to sell its own cars in order to keep margins up, and gives its vehicles more visibility.
Tesla is going to attempt to fight the laws that prevent it from selling its own cars, but dealers associations are powerful, and Tesla Motors Inc (NASDAQ:TSLA) is a name associated with Obama’s government policies, something that may tarnish it in a Texan political atmosphere led by Rick Perry.