Tesla Will Battle Louisiana's Direct Sales Legislation

Industry News / 13 Comments

America's largest EV producer is tired of the outdated dealership model.

Tesla will challenge the state of Louisiana's law that bars the auto manufacturer from selling directly to consumers. According to Reuters, Tesla calls the state's refusal "protectionist and anti-competitive."

Tesla's battle with Louisiana is the latest in a series of legal battles against several states that don't allow direct sales. Unlike the traditional dealer model, Tesla sells directly to consumers either via its website or company-owned dealerships.

The current legislation, active in at least a dozen states, was established to protect the dealership model. For decades, dealers have acted as a third party between manufacturers and consumers, and now the traditional model is facing an influx of new automakers that have no intention of selling via a third party.


The legislation hasn't done much to stop Tesla sales, as owners merely travel out of state to buy a Tesla Model Y. You can buy a car online and have it delivered to a neighboring state, and then only can you register it in the state where you live. It's not such a hassle if you have to do it once, but these states also ban the servicing of vehicles. Admittedly, this isn't such a big deal in an electric car, but it's still worth remembering.

It is, for example, entirely legal for Tesla to put up a showroom in Louisiana, but it may not sell a vehicle from the premises. Such dealerships may exist solely to showcase a car to a customer. The employees in these dealerships aren't even allowed to discuss pricing, deals, lease agreements, or anything else related to selling a car.


Tesla says Louisiana is violating state and federal antitrust laws. "Louisiana consumers' freedom is being unduly restricted by protectionist, anti-competitive and inefficient state regulation," stated the lawsuit. Tesla's beef does not stop with the state. It also accused the state's existing dealers, dealer associations, and Louisiana Motor Vehicle Commission members of an "unlawful conspiracy" to bar it from doing business in the Pelican State.

Tesla's battles with the traditional dealer system date back to 2016 when it dragged Michigan to court. Tesla won that battle, but it's still struggling to get direct sales legal in Texas, where it invested billions in erecting a new Gigafactory. In New Mexico, it got around state laws by erecting a dealership on tribal land.


By taking on this archaic system, Tesla is also opening the door for its main rivals. Lucid, Rivian, and Fisker will all benefit if Tesla manages to revamp the system.

Not that the world's largest EV maker has anything to worry about. Tesla's sales figures are mighty impressive, and all of the manufacturers mentioned above are nowhere near reaching total capacity. Lucid is arguably the only manufacturer currently posing a direct threat to Tesla, and its continued struggles with production mean it will likely take years before it gets to the point where Tesla needs to start worrying. But what if other, larger automakers like Volkswagen start selling direct?

In the meantime, Tesla is clearing the path for new EV manufacturers to operate freely once they get up to speed.

Tesla Tesla Tesla
Source Credits: Reuters

Join The Discussion



Related Cars

To Top