Can't Buy a Tesla at the VA Tesla Showroom

Moneybox
A blog about business and economics.
June 25 2013 4:30 PM

Why Tesla Has a Showroom in Virginia Where You Can't Actually Buy a Tesla

A Tesla at a dealership at the Dadeland Mall on June 6, 2013, in Miami.
A Tesla at a dealership at the Dadeland Mall on June 6, 2013, in Miami.

Photo by Joe Raedle/Getty Images

Stefanie Dazio has a nice piece in the Washington Post profiling a Tesla showroom in Virginia where, curiously, you can't actually buy a Tesla.

The reason? The arcane patchwork of state-by-state laws aimed at requiring auto manufacturers to operate exclusively through third-party middlemen. This is one of these crazy kinds of public policy that it would be extremely hard to get off the ground nowadays, but once entrenched it is extremely difficult to dislodge. Precisely because of pointless rules about auto dealerships, there are auto dealership companies headquartered all around the country. That means most state legislators and all members of Congress represent a guy who owns an auto dealership. Car companies, meanwhile, are headquartered in Michigan or Germany or Japan and even though they're much bigger than dealerships, the dispersed and widespread nature of the car dealership industry gives them extra lobbying ooomph.

Major auto companies and the dealerships they "partner" with are engaged in basically a constant low-intensity political conflict, but when Elon Musk decided he wanted to reinvent the automobile, he decided to try to reinvent the business model as well. Consequently, Tesla doesn't truck with a network of middlemen.

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And so in places where a manufacturer can't own a dealership, it's trying to operate venues that are dealerships-that-don't-sell-cars—places where you can come and check out the product but where the salesmen aren't allowed to sell anything. The idea, presumably, is that with a wink and a nod the customer can then head off to the Tesla website and buy the car. But, of course, since there's no good reason for the law in the first place, the risk is that the dealership lobby will change the rules and close this showroom loophole.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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