There is a debate about how innovative are Tesla’s new cars, but the company is indeed trying to do something new in the way it sells them. Tesla wants to sell directly to consumers without the use of dealers. Unfortunately, however, many states are trying to prevent direct sales. These laws are outrageous exercises in economic protectionism in favor of special interests.
When it comes to keeping down the costs of distribution, a manufacturer is the consumer’s BFF. Both the manufacturer’s and the consumer’s interest is the same—having the most efficient and cost-effective form of distribution. An efficient distribution allows the manufacturer to sell more cars, because the total cost of the product is lower. It also benefits the consumer, because the distribution is incidental to the enjoyment he or she gets from the product.
Some legislators argue that dealers are necessary because they can provide important services to consumers. But the manufacturer takes the level of service into account when deciding whether to sell directly. Optimal service helps the manufacturer’s bottom line as well, because it gains a reputation for cars that are well serviced and thus last a long time.