{"id":1368,"date":"2013-12-17T23:59:23","date_gmt":"2013-12-17T23:59:23","guid":{"rendered":"http:\/\/www.jlpp.org\/old_blog\/?p=1368"},"modified":"2013-12-17T23:59:23","modified_gmt":"2013-12-17T23:59:23","slug":"are-state-franchise-laws-stunting-elon-musks-brainchild-tesla-motors","status":"publish","type":"post","link":"https:\/\/publications.lawschool.cornell.edu\/jlpp\/2013\/12\/17\/are-state-franchise-laws-stunting-elon-musks-brainchild-tesla-motors\/","title":{"rendered":"Are State Franchise Laws Stunting Elon Musk\u2019s Brainchild, Tesla Motors?"},"content":{"rendered":" \n\n
\"C\/o<\/a>
C\/o Business Insider<\/figcaption><\/figure>\n\nTesla Motors<\/a> released the world\u2019s first luxury electric car in 2013: the Tesla Model S. The Model S won Motor Trend\u2019s 2013 Car of the Year<\/a>, and Motor Trend hailed the Model S as proof that America \u201ccan still make (great) things.\u201d\n\nUnfortunately, the franchise laws of at least 48 states<\/a> ban or limit Tesla sales\u2014get this\u2014to prevent unfair competition<\/i>. Franchise laws require <\/i>automakers to sell their cars exclusively through dealership networks.\n\nTesla thinks the franchise model is as outdated as the internal combustion engine. Instead, Tesla sells its vehicles via the direct-to-consumer model, meaning no franchised dealerships or middlemen. Currently, you can only purchase a Tesla by phone or via the company\u2019s website, and many states would like to keep it that way.\n\nStates Target Tesla<\/strong>\n\nTesla has faced bans<\/a> in North Carolina, Minnesota, New York, Virginia, and Texas. The North Carolina Senate approved a bill, ultimately dropped by the North Carolina House of Representatives, forbidding non-dealership sales. In response to the bill\u2019s death, Tesla executive James Chen said<\/a>, \u201cI think folks understood that this was an attack on the free market, that this would have precluded North Carolinians from having the freedom to choose the cars they wanted to purchase [and] the House leadership understood that.\u201d\n\nSpeaking in support<\/a> of the failed North Carolina law, Bob Glaser, head of the North Carolina Automobile Dealers Association, said, \u201cIt\u2019s a consumer protection, and why we say that is a dealer who has invested a significant amount of capital in a community is more committed to taking care of that area’s customers.\u201d\n\nFranchise dealers made similar and ultimately unsuccessful efforts<\/a> to block Tesla sales in Minnesota and New York.\n\nThe Virginia Department of Motor Vehicles, the Virginia Automobile Dealers Association, and Tesla recently reached an agreement<\/a> to grant Tesla a single dealership license. In exchange for the license, Tesla agreed to withdraw a lawsuit it filed after the Department of Motor Vehicles rejected Tesla\u2019s application for a dealership license.\n\nTesla has only lost its franchise law fight in one state:Texas<\/a>. The Texas franchise statute is one of the toughest in the nation. Accordingly, at the two Tesla galleries in Texas, employees can\u2019t offer you a test drive, reveal vehicle prices, or even provide the website address. Tesla CEO Elon Musk told Automotive News<\/a> that Texas worded the statute \u201c[l]ike Green Eggs and Ham, you know. If you\u2019re a manufacturer, you cannot sell it any which way, no matter what. You can\u2019t sell it in a house, can\u2019t sell it in a mouse, can\u2019t sell it in a grouse. It\u2019s like, OK, wow. You can\u2019t sell it.”\n\nWho is Elon Musk<\/a>, and why will he defeat the franchise laws?<\/strong>\n\nElon Musk, the founder of Tesla, is cool<\/i>. No, seriously, he\u2019s the real-world Iron Man<\/i>. During the development stages of the Iron Man<\/i> movie franchise, director Jon Favreau wasn\u2019t sure how to bring Tony Stark, the main character\/billionaire genius, to life. Robert Downey Jr., the actor playing Stark\/Iron Man, suggested meeting with Musk<\/a> for inspiration.\n\nMusk didn\u2019t disappoint, and I don\u2019t think he\u2019s capable of doing so.\n\nMusk is a serial entrepreneur. At age 12<\/a>, he wrote his first piece of software and sold it for $500. He left his home in South Africa and came to the United States\u2014without parental approval\u2014at age 17. In 1995, at age 24, Musk started a Ph.D. at Stanford in applied physics and material sciences\u2014he dropped out after two days of class.\n\nInstead of studying, Musk created Zip2 Corporation, a company that developed e-commerce publishing software. In 1999, Compaq bought Zip2<\/a> for around $300 million. Musk used some of his Zip2 wealth to build an online bank called X.com. X.com eventually became the world\u2019s largest Internet-based payment system\u2014PayPal. In 2002, Musk sold PayPal to eBay for $1.5 billion. As if that wasn\u2019t enough, Musk founded SpaceX<\/a>. SpaceX is the first private company to launch a rocket into space. One of Musk\u2019s rockets recently supplied<\/a> the International Space Station.\n\nPretty impressive. Franchise laws? I believe Musk will do what entrepreneurs do: innovate. Musk will find a way to innovate and render the franchise laws a non-issue.\n\nReaders, are you ready to side with Musk and drive a Tesla?","protected":false},"excerpt":{"rendered":"

Brian Hurd examines how states across the nation are trying to make it difficult to buy the 2013 Car of the Year. <\/p>\n","protected":false},"author":1,"featured_media":1370,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[28],"tags":[174,265,542,549,686,838,1517,1518,1596],"class_list":["post-1368","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-student-blogs","tag-automotive-news","tag-cars","tag-electric-cars","tag-elon-musk","tag-franchise-laws","tag-innovation","tag-tesla","tag-tesla-motors","tag-unfair-competition"],"acf":[],"_links":{"self":[{"href":"https:\/\/publications.lawschool.cornell.edu\/jlpp\/wp-json\/wp\/v2\/posts\/1368","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/publications.lawschool.cornell.edu\/jlpp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/publications.lawschool.cornell.edu\/jlpp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/publications.lawschool.cornell.edu\/jlpp\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/publications.lawschool.cornell.edu\/jlpp\/wp-json\/wp\/v2\/comments?post=1368"}],"version-history":[{"count":0,"href":"https:\/\/publications.lawschool.cornell.edu\/jlpp\/wp-json\/wp\/v2\/posts\/1368\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/publications.lawschool.cornell.edu\/jlpp\/wp-json\/wp\/v2\/media\/1370"}],"wp:attachment":[{"href":"https:\/\/publications.lawschool.cornell.edu\/jlpp\/wp-json\/wp\/v2\/media?parent=1368"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/publications.lawschool.cornell.edu\/jlpp\/wp-json\/wp\/v2\/categories?post=1368"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/publications.lawschool.cornell.edu\/jlpp\/wp-json\/wp\/v2\/tags?post=1368"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}