- A New York State Senator wants to repeal Tesla’s licenses to operate stores in the state.
- The licenses only exist because state leaders chose to protect their car dealership friends from competition, a sign of money’s hold on politics.
- While Tesla has five stores in the state, companies like Lucid, Rivian and Scout are still barred from setting up sales centers anywhere in New York.
New York wants to be a leader in electrification. With an economy that’s larger than Canada’s and a relatively wealthy, relatively progressive population, you’d think the EV transition would come easy. There’s certainly plenty of money behind it. But there’s only one issue, one that sits at the center of so many problems in this country: Money in politics.
Anyone who believes that corporate money can’t overrule public opinion has never gone up against car dealership lobbyists. Long before Tesla was perceived by many as public enemy number one, long before the Department of Government Efficiency, there was the David vs. Goliath battle at the center of the Tesla story. Most states had laws explicitly crafted by car dealers to avoid competition from manufacturers, and they weren’t going away without a fight. Some even wrote new laws to keep Tesla out.
Over a decade after the battle started, it’s still raging today. And it’s not a red-state thing. The next battleground may just be New York.
New York State Senator Patricia Fahy just fired the first shot, arguing in an interview with the New York Times that the state should revoke Tesla’s ability to run company stores in the state.
Some background: New York was one of the states that didn’t have a law banning direct-to-consumer sales, but passed one as Tesla started to threaten the car dealership cabal in the Empire State. Despite consumers largely preferring direct-to-consumer brands’ pricing transparency, despite it being a viable competitive model to the franchise model and despite Tesla having no franchise agreements, the state banned the practice entirely.
To be clear: There is no remotely plausible reason why companies selling direct-to-consumer is dangerous, bad or anti-competitive. That’s why you can buy your phone at an Apple Store, or at Best Buy. It’s fine.
The law carved out one exception. Tesla already had five stores open in the state, so it would be allowed to keep them. That means that as Tesla has grown from a tiny upstart to the most valuable automaker in the world, it has had to service the entire two-trillion-dollar economy of New York State with just five storefronts. That restriction is not only bad for Tesla, it’s even worse for upstarts like Rivian and Lucid, which haven’t been able to open any stores in New York. That’s a direct result of New York’s anti-competitive dealer protective law, prompted and protected by its powerful network of powerful car dealers.
The result is that Tesla has both a direct-sales monopoly and zero opportunity for growth. Unbelievably, Senator Fahy—a Democrat—is trying to blame Tesla for this result. Following CEO Elon Musk’s dismantling of federal institutions, she’s pushing to shut the company out of the state.
Mr. Musk, she told the New York Times, is “part of an administration that is killing all the grant funding for electric vehicle infrastructure, killing wind energy, killing anything that might address climate change. Why should we give them a monopoly?”
She’s so close to getting it, but somehow avoids the bigger sin: Why on Earth is New York handing out artificial monopolies to anything? While she proposes giving Tesla’s five licenses to rivals like Lucid, Rivian and Scout Motors, that idea is continuing the same broken practice of allowing the state to pick winners and losers. The dealers give us jobs and money, so they win. Tesla is the enemy, so they lose. Rivian, Lucid and Scout have done nothing so far, so they get the scraps, but with the awareness that New York can revoke their special license whenever their CEO pisses off a Senator.
It’s a rotten, dirty solution to a rotten, dirty problem. New York is picking a fight with Tesla again, and it’s consumers who always end up losing.
Contact the author: Mack.hogan@insideevs.com.
