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Tesla Motors, Inc., an American electric automobile company, uses a direct sales model to sell cars to consumers through its own showrooms. However, the traditional system for selling cars in the United States requires the use of dealer franchises. State laws, regulations and politics have made it very difficult and expensive for Tesla to operate in numerous states. This paper highlights the history of the U.S. automotive retail sales system, Tesla’s rationale for their pure direct distribution model, the particulars of some state challenges and their international successes. The automotive industry is dynamic and its regulatory scheme must be flexible, not implemented to protect long standing dealer interests.

Tesla and the Policy behind Its Long Haul to Selling Cars in the U.S