Tesla Motors Receives Support From The Koch Brothers

Tesla Motors has been involved in legal disputes from Arizona to New Jersey to Michigan and recently in Connecticut. The electric-car maker is always finding itself at odds with dealers over their direct-to-consumer sales model. Rumblings have led some to believe that Tesla will one day implement a system that utilizes both franchise dealers and Tesla’s gallery stores. In an interview with Autoline Daily in the middle of October 2014, Tesla Founder and CEO Elon Musk said, “We may need a hybrid system, with a combination of our own stores and some dealer franchises.”

During intense debate in Connecticut last week when 80 dealers protested Tesla Motors at the state capital, a Tesla Motors representative said that a hybrid system is possible in the future. However, a spokesperson for Tesla said something that seems to indicate the partnership is not happening anytime soon. The Hartford Courant quoted Tesla Spokesman Will Nicholas when said, “the company (Tesla) sees dealers as unnecessary intermediaries between the manufacturer and the customer…we’re in control of the whole process. We find it more efficient to control the customer experience.”

Does Tesla really want to work with dealers one day or does it see them as an “unnecessary intermediary?”

That question may not be answered for some time. However, what is clear is that Tesla is pushing to legalize direct-to-consumer sales in all states regardless of whether or not they plan to partner with dealers in the future. Tesla has recently seen support for its cause from 10 organizations who collaborated on a letter written to U.S. state government leadership. The groups are The American Anti-trust Institute, Consumer Federation of America, Consumer Action, Consumers for Auto Reliability and Safety, The Sierra Club, Mackinac Center, The IT and Innovation Foundation, Environment America and Americans for Prosperity. The Koch brothers fund Americans for Prosperity, thus media coverage of their support for Tesla gained quick momentum. In the letter, the groups express their support for direct-to-consumer sales.

The letter isn’t all about Tesla Motors, but does mention the organization. Part of the letter reads, “While we take no position in this letter on the appropriateness of many other aspects of dealer protection laws, we are strongly opposed to efforts to use these laws to block direct distribution.” The letter furthermore states that those signatories on the document feel that the current franchise laws are detrimental to the industry as a whole. Another part of the letter reads, “These laws have negative consequences for the entire automotive industry – including what kinds of cars are built and sold, how they are powered, and what innovative new technologies can reach the market.”

What does this support for Tesla Motors mean moving forward? They already have had the open support of senior management at the FTC, now, organizations, including some with large financial backers are in their corner. Will Tesla Motors ultimately gain the support of other large and powerful organizations? The important question is what will dealers do to garner their own support as they defend dealership laws?