Tesla Can’t Even Test Drive In Iowa

While Arizona, Texas, New Jersey, Maryland and Virginia have banned Tesla Motors from selling their vehicles, Iowa is taking a different approach. Tesla had planned a three-day event, beginning on September 9th at the Marriott Hotel parking lot in Des Moines. The goal was to allow test drives of their Model S sedan. What occurred was a unique type of government intervention. The Iowa Department of Transportation asked Tesla to stop their planned event. It was the Iowa Automobile Dealers Association that told IDOT about the test drives. The reason that Tesla was given for the shutdown of their event was two-fold. The first reason is that Tesla isn’t licensed as a dealer in Iowa and second, Iowa state law prohibits auto manufacturers from selling directly to the public.

Iowa Code 322.3 prevents auto manufacturers from selling directly to consumers. The Iowa Department of Transportation receives some of the funding for road projections through the Road Use Tax Fund. According to Iowa State Code 322.12, Motor Vehicle License Fees are collected at franchise dealerships and then sent monthly to the state treasury where they are moved into the Road Use Tax Fund. Backing IDOT is Bruce Anderson, President of the Iowa Automobile Dealers Association. He said the license that Tesla doesn’t have, “is a matter of consumer protection. He went on to say “to obtain a license, dealers have to be insured and have a physical location where buyers can go if they have a problem with the vehicle. Car dealers also have to be bonded through the state. If a dealer fails to deliver a vehicle’s title to the buyer, the buyer can file a claim against the dealers bond.”

Another argument by Anderson is that of competition. It’s the same competition that’s eliminated the direct-to-consumer sales model. He told the Des Moines Register, “Independent dealers are aggressive in pricing against each other. If you wanted to buy directly from Chevy or Ford, the price on the sticker would be the price.” Iowa lawmakers agree.

Iowa Senate Democrat Matt McCoy, who reportedly wants to buy a Tesla Model S, still doesn’t think they should be sold in his state in the near future. “I have mixed feelings about it,” McCoy said. “Because I really like the car and I really like what the car stands for. But in Iowa we tend to respect our system and the way it was set up, and I don’t see any appetite to change that.”

What can dealers make of yet another scrum between Tesla Motors and a state dealers association? A frequent comment theme for Internet stories related to Tesla Motors is that dealers are afraid of Tesla. The notion is that they worry about competition with the Tesla product and sales model. However, Tesla is always violating the law in states where it files lawsuits to get laws changed. What do you think when you read online complaints against dealerships that claim they are afraid of Tesla and stifling free market competition?