Battle4Liberty

I’ve enjoyed watching premium electric carmaker Tesla’s ongoing political battles. According to Consumer Reports and others, Tesla’s cars perform well, but dealers that sell other makes are trying to ban sales of the product at the state level because the carmaker has bucked the traditional franchise dealer system in favor of selling direct to the consumer.

A number of states are involved in this fight, but one example is close to my home. The North Carolina House of Representatives struck down a bill that would have kept Tesla from selling vehicles in the state, but the NC Auto Dealers Association has vowed to continue fighting.

So what precisely is the NCADA’s argument? While Tesla’s argument is transparent (see http://teslamotorsnc.com), a search for any news or commentary containing “Tesla” at the trade association website (www.ncada.com) came up empty.

I’ve heard the tired Marxist “job loss” argument—that sales reps would lose their jobs if consumers purchased their cars directly from manufacturers. Of course, horse-and-buggy makers tried the same argument when cars came along.  I’ve heard the “lost government revenue” argument, which presumes that Tesla buyers would willingly pay more for another vehicle from a dealer located in the state if Tesla was banned. I’ve heard the territory argument, which suggests that dealers have rights to various geographical areas. This is certainly true for dealers that have been granted those rights by manufacturers, but Tesla hasn’t done so.

None of these arguments hold water, leaving cronyism as the only rational explanation. Apparently, some carmakers don’t want to outcompete Tesla with a superior vehicle or a better business model, but just want to keep Tesla out of the game altogether. They need willing legislators to make this happen. Fortunately, they haven’t found enough support yet in North Carolina.

This is an easy issue to analyze. Whether or not you like Tesla, green cars, or companies bypassing retailers and selling directly to consumers, this is about liberty—the freedom a company has to decide how to design, market and distribute its products, AND the freedom an individual has to make a purchase decision without government interference.  As Dell discovered with computers, there are both pros and cons to the direct-sales model, but the marketplace—not the government—should determine the ultimate success or failure of Tesla’s cars and the company’s approach to doing business.

Our economy advances when companies innovate. Some succeed while others fail, but surviving firms always get stronger and meet customer demand more effectively when they learn the lessons from experimentation that occurs within the industry. Consider that several decades ago consumers had no choice but to purchase gasoline from full-service stations. Today, we swipe our cards and pump our own gas. The current, more efficient system evolved as businesses experimented with new technology and consumer preferences. Many displaced workers found jobs in the convenience stores that emerged. While Oregon and New Jersey still require that gas be distributed the old way, this hasn’t halted progress in the other 48 states.

As defenders of free enterprise, we should be the first to support companies like Tesla that seek to compete without government interference. A petition requesting that the Obama Administration weigh in on the issue hit 100,000 signatures, which should prompt an official response soon. Let the chips fall where they may.