As we all known, tesla had gain a huge popularity in the few past years through its innovative automobile manufacturers model. But the fact that may surprise most of people is that in many states in America, tesla cannot sell cars at all.

The reason behind this is that tesla has a different business channel than other automakers. Tesla sells its own cars directly through its own branded stores and online, without any other middlemen or franchised dealerships. On the contrary all U.S. states have laws that prevent automakers with existing franchisees from opening their own dealerships to compete with them. However, dealer associations in a number of U.S. states, including Massachusetts, Missouri, North Carolina, have tried to expand the law to include manufacturers like tesla that don’t franchise dealers.

Nevertheless, some states like Michigan have taken an extra step and passed laws that ban direct sales. The result is tesla could only have shown room in these state but cannot sell cars. Although two years ago tesla had applied for a class A license, which would allow the automaker to open a company-owned dealership in the state, the license is still denied by Michigan government. To respond this, tesla claims that they will continue to take steps to defend the rights of Michigan consumers. We now don’t know what step tesla will take to defend consumers’ rights, but one thing that is certain is that tesla won’t change is direct sell model. Apparently, a company-owned dealership could have lots of benefits. It saves the cost for those middlemen and thus won’t pass the cost on consumers. Also, with less number of distribution channels, tesla could focus on maximizing the efficiency.

However, the thing is should tesla insist on sell directly to customers in those states that ban direct sale. Because the time spend on waiting those states to pass the law that enable tesla to finally sell cars is unknown, there would be huge loss of potential revenue. And changing the way of distribution may be favorable in entering new market as dealerships are usually more familiar with the local market.

works cited:

http://fortune.com/2016/09/16/tesla-denied-license-michigan/

http://www.greencarreports.com/news/1098276_ftc-calls-michigans-tesla-ban-protectionism-for-dealers

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