Government overregulation isn’t a friend of either the business community or consumer. I’ve been pleased that many voices from Gov. Doug Ducey to key legislators to community business leaders desire to cut red tape and simplify government policies to promote economic development.
At the same time, powerful forces want to retain the status quo and quash innovative business practices.
Arizona law currently forbids car manufacturers from selling vehicles directly to customers. Auto dealers won this protection against competition decades ago and it now stifles competition. When I became a Tesla owner in 2012, I had to purchase my Model S from California. Arizona law limited my right to make this buying decision. This law has clearly has outlived its usefulness.
Currently, Arizona is one of only five states where such direct new car sales from manufacturers are illegal. This creates a variety of problems for Tesla owners, would-be owners and for Tesla itself – problems I had to deal with firsthand when I bought my new Tesla.
Arizona law not only makes buying this car inconvenient, it’s stopping Tesla from expanding its business here, creating new jobs and new revenues for the state coffers.
Fortunately, the Legislature has before it a simple fix to the law – one that would eliminate the auto dealer middle man for companies like Tesla and startup Helio Motors. The bill would allow automakers with no current dealer relationships in Arizona to sell directly to customers. To protect consumers, the bill mandates that such automakers must have a local service center to handle warranty, recall or repair issues.
Tesla isn’t any threat to Arizona’s new car dealers. Tesla currently sells about one car per day in the state, but the company is pushing the auto industry in new directions that appear to be uncomfortable for many dealers. Maybe that’s what’s scaring the brick-and-mortar auto dealers.
Tesla sells an all-electric car now and will be marketing an affordable $35,000 to $40,000 car in the next two or three years. Like many Arizonans, I want to encourage the development of environmentally-friendly cars that are less expensive to operate and reduce our reliance on foreign oil. I would hope our state leaders move to embrace innovative companies like Tesla to develop such cars and make it easier to buy a car in Arizona.
Customers hoping to learn more about Tesla Motors who visit the Tesla Gallery in Scottsdale Fashion Square can walk away frustrated by Arizona’s archaic laws. A Tesla associate at the Gallery can talk about the power, features, agility, and styling of the car, but when it comes to asking about the price, such conversations are forbidden by Arizona law. What happened to freedom of speech? What happened to my right to control my own buying decisions? Tesla employees literally can’t discuss the price of the car, but instead must refer potential buyers to the Tesla Motor’s website. Dumb, huh?
Our Legislature can fix this foolishness by taking action to end the auto dealers’ government-protected monopoly. Tesla has shown an absolute commitment to delivering a quality product. While Tesla has a service center in Scottsdale, the need for service is pretty rare. The company also sends out mechanics to make house calls. That is unheard of in the car industry. Never have I been treated so well by a car company!
I’m proud to live in a state that encourages business innovation and works to eliminate roadblocks to success. Auto sales shouldn’t be limited to customer-wrenching trips to a dealership.
Tesla is a new kind of car company with a 21st century business model that bypasses the inefficient, expensive dealer network. The Legislature and Gov. Ducey should lift this outdated protectionist law and let Tesla sell directly to Arizonans.
— Mark Rohde, Ph.D., is a family psychologist who practices in the Phoenix area.