Monday, March 17, 2014

The Tesla Tempest

New Jersey is third state that is "banning" the direct sale of Tesla motor vehicles.  The first knee jerk reaction is that "big oil" is behind this action. Perhaps it is. However, the obvious culprit that is lobbying or rent seeking the local law makers to stop this voluntary economic behavior is the Auto Dealer lobby.

The highly respectable and honorable car dealer lobby provides an intriguing claim: These car salespersons are highly concerned about the consumer's interest. These caring and magnanimous car sales persons want Tesla to sell their cars through a dealer distribution channel,  and not directly to the consumer straight from the manufacturer.

How does purchasing a car via the dealer versus direct from the manufacturer "protect" the consumer? Answer: It does not. But, it does provide the other auto dealers protection.  Protection from the newest competitor: Tesla Motors.

Rent seeking or lobbying, provides benefits to a few, and the dispersed cost to others. In this case, the auto dealers, in their zeal to rescue consumers from the nefarious plot of selling cars directly to consumers, benefit while consumers pay the cost for their rent seeking. 

Note: people that want a Tesla vehicle will still purchase one directly from Tesla Motors.

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