Tesla Hits A Speed Bump In Missouri

May 9, 2014

It's been a weird week for Tesla.

On the one hand, the company issued a first-quarter report that showed the automaker meeting sales goals, making a strong entry into China, and laying the groundwork for its eagerly anticipated battery-development "gigafactory".

On the other hand, even though deliveries were strong, analysts wanted them to be stronger, and Tesla's stock price plummeted

Arguably worse than that, Tesla says that auto dealers in Missouri are trying to ram a bill through the state legislature that would effectively prohibit Tesla from selling vehicles using the (admittedly controversial) model it's deployed elsewhere in the U.S. In a blog post published yesterday, the company states:

"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."

Tesla says that current Missouri law only prevents franchisors from competing against their franchisees. The law was designed to keep automakers and other big companies from selling their products in ways that compete directly with dealerships and other franchise outlets.

That law has left plenty of room for Tesla to operate in Missouri, since Tesla doesn't use dealerships, and CEO Elon Musk has repeatedly voiced opposition to creating a dealer network for the brand. Without such a network, though, the new legislation would essentially make it impossible for Tesla to sell vehicles to Missouri consumers.

Tesla hasn't yet indicated how it will fight the bill but you can bet that the company has retained a good lobbyist (or two). If the bill should pass and be signed into law, Tesla could attempt to work around it, using the company's unusual system of galleries. Then again, it might sue the state, just as it's done in New Jersey.

We can't say for sure how either of those approaches would pan out, but Tesla has underdog appeal working in its favor -- not to mention some very stylish, tech-forward cars. That's more than most auto dealers can say. (The public holds a negative view of dealers, seeing them as only slightly more trustworthy than lobbyists and legislators.) If Musk & Co. play their cards right, it would seem they're poised for eventual success.


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