Just as Wall Street is cooling to the prospects of Tesla Motors Inc. (NASDAQ: TSLA), which recently announced disappointing earnings, the electric car company faces the likelihood that it will need to fight one more state for the right to sell its cars there. Missouri may be close to forcing the sales of all cars and light trucks of any kind through traditional auto dealers. Direct sales are at the core of Tesla’s models. Local dealers are among the most important enemies of its business plan.
Tesla was quick with a response titled “Trouble in Missouri“:
We have just become aware of a last-minute attempt by the auto dealers lobby, via pressure on legislators, to bar Tesla from selling its vehicles direct to consumers in the state. This extraordinary maneuver amounts to a sneak attack to thwart due process and hurt consumer freedom in Missouri.
In the last week before Missouri’s legislature ends its current session, dealers proposed new language in an existing bill that would force Missouri consumers to purchase new vehicles only through middleman franchised dealers. The bill, HB 1124, has been in circulation since December 2013. It was passed by the House on April 17 without the anti-Tesla language. Last night, the bill with the new anti-Tesla language passed the Senate after zero public consultation and could soon move to the House floor for a final vote, essentially without debate.
With a potential slowing of the sales of its cars, Tesla has to deal with skepticism on two fronts. The dealership one may be the larger plague. Tesla can improve sales as it improves throttled supply. No one questions whether there is demand for its products. The dealership trouble is more vexing because it has jumped from state to state and has sometimes been unexpected. Missouri is one of a line that has reached at least three states. And dealers can be a powerful lobby.
Tesla’s new distraction may become its most significant one. A few months ago, few people would have guessed it would face barriers to where its sells its cars.
ALSO READ: Tesla Gets Support From FTC for Direct Sales
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