Tesla Motors Inc Supported By Koch Bros., Sierra Club Against Dealers

In its battle against car dealers, Tesla is getting support from groups with a diverse background, including political and environmental

Tesla has received new supporters for its direct sales model,in the form of environmental group Sierra Club and Americans for Prosperity, the political action group backed and funded by the Koch Brothers, according to a report from Bloomberg by Dana Hull. The EV manufacturer has been waging a long-running battle with franchised dealers who are trying every means to block Tesla from selling the cars directly to customers.

Current franchise laws thwart innovation

Both Tesla supporters are among the 10 public-interest groups that have sent a letter to U.S. governors and legislators advocating in favor of the direct sales model. The public interest group’s letter reads that existing franchise laws “retard innovation.”

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Customers benefit from Tesla’s direct distribution strategy, as they get new choices on the vehicles they buy and how they buy them, according to the group.

“Moreover, our concerns are not limited to Tesla, as these laws have similarly negative effects on any company seeking to distribute their cars directly to consumers.”

Those that signed the letter include three free market groups, four competition and consumer protection organizations, two environmental organizations and the Information Technology and Innovation Foundation.

The letter said even though the groups have been on opposite sides on many occasions, they are now at a consensus “on an issue of considerable public importance concerning state laws that restrict the purchase and sale of automobiles.”

Long-running battle between Tesla and dealers

Ever since the company started selling its cars, it has preferred a direct sales model rather than going the traditional dealer way. The automaker has faced legal battles in states such as Michigan, New Jersey and Texas over the right to sell its Model S directly through company-owned stores. Tesla claims state franchise laws help in creating a monopoly for dealerships.

Daniel Crane, associate dean of faculty at the University of Michigan Law School, lead the group to convince legislators in states such as New Jersey, where new car dealers must enter into a franchise agreement to get a state license.

The letter from the group notes that the auto industry is more competitive now than it was before when many of the pro-dealer laws were passed. The letter talks about Tesla’s trials and tribulations with franchise dealer laws, suggesting that this is not just Tesla-specific.