Tesla Uses Test Drives To Lobby Lawmakers

Tesla stockBlomst / Pixabay

Tesla Motors Inc (NASDAQ:TSLA) lobbied lawmakers and Republican government officials in a relatively unique way by offering them a test drive of the Model S, says a report Sfgate. In North Carolina, Tesla looked to be in trouble when it was banned from opening its showrooms, as well as selling its cars online.

However, Tesla found a way out of this problem by hosting a test drive, where after taking a drive Republican Thomas Tillis said, “When you accelerate it, it was the same sort of feeling I got when I test-drove a Mustang Boss back when I was probably 23 years old.”

A few obstructions

Tesla’s strategy of selling cars directly to customers through the Internet or through company showrooms was opposed by franchised dealers in as many as seven states. The franchisee dealers went against Tesla for selling its $70,000 and above Model S directly because the model appeared a potential threat to the dealers.

In the third quarter, the EV manufacturer sold around 5,500 units of Tesla Motors Inc (NASDAQ:TSLA) Model S, which was double what it sold last year. The company revealed on November 6th that it plans to sell “slightly under 6,000” units in the current quarter. CEO Elon Musk said that the demand for the car is more than the supply.

Apart from dealers, who are opposing Tesla’s sales model, the car maker is also undergoing a federal investigation related to three fire incidents in the Model S, recently. In another incident, three workers of the company were injured on November 13th at its only assembly plant in Fremont, in an industrial accident.

Tesla up against strong rivals

Tesla Motors Inc (NASDAQ:TSLA) is a more or less in similar condition as Microsoft Corporation (NASDAQ:MSFT) was in the 1990s, when it was undergoing government antitrust action without the help of any experienced support team to sail the company through the crisis.

Musk is trying to stand against one of the most powerful U.S. lobbies, which is far more experienced than Tesla, and usually has its group of supporters as legislators.

Dealers have been one of the biggest donators spending around $86.8 million on state election races between 2003 and the present. Along with that, these dealers have also injected $53.7 million into campaigns for federal office, according to the Center for Responsive Politics.

“The challenge we face, of course, is that the auto dealers are very strong and very influential at the state level, among the legislatures,” Musk told shareholders, in June. Dealers, he said, are “making it harder to get things done.”

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

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