Electric Vehicles

It’s a Free Market Economy… Except When Buying a Car

Back in 2011, electric vehicles were still a pipe dream for most consumers. At that point, car dealers had no idea what the future would hold regarding EVs.

With that backdrop, my wife and I decided to take a giant leap and lease a Nissan LEAF EV. Once we made the decision, we had to find a Nissan dealer that was carrying the LEAF.

I went to the Nissan dealership near our house. “We’re not selling the LEAF here,” a man from the sales team told us.

When I asked who might be selling it, he shrugged his shoulders. “I don’t have any idea,” he said. “We didn’t want to bother with the expense of the charging infrastructure and the training for all of our service technicians.”

I later found a dealership about 40 minutes away that had the LEAF. I arranged for our family to take a test drive.

When we got to the dealership, there were no charging points. There weren’t any LEAFs either. I went inside and asked where they were.

I was referred to the sales team’s EV specialist. We followed him outside behind the building. There we saw the dealer’s lone EV charging point… right next to the dumpster.

That sums up how most conventional dealerships feel about EVs. They would just as easily not have anything to do with them.

That’s because the cat is out of the bag: EVs are like the old Maytag washers and dryers. They never break.

That means that EV service departments aren’t as busy as conventional dealerships. And therein lies the problem for the dealership owner.

You see, vehicles with internal combustion engines have lots of moving parts that EVs don’t have. And those parts wear out on a regular basis, providing dealerships with their main source of revenue.

But EVs can go 50,000 miles before needing any maintenance. That was the case with our Nissan LEAF.

We had the car for three years. All we replaced in the course of 36,000 miles were the windshield wiper blades and two tires.

No wonder dealerships and their state associations have fought long and hard to keep companies like Tesla from selling cars in their states.

Tesla has a different business model. It doesn’t involve franchised dealerships. Tesla and those who own a Tesla don’t need dealerships.

Tesla sells cars online, although the company does have stores in high-traffic locations where customers can learn about its cars.

The company could not care less about revenue from service and maintenance. Its business model isn’t built that way.

But there are several states in the U.S. that have banned Tesla from selling cars.

So Tesla has taken state dealership associations to court to fight outdated franchise laws. Its most recent victories have been in Indiana, Arizona and Missouri.

Now the company is taking on Wisconsin and Nebraska. In Wisconsin, state law prevents automakers from owning, controlling or operating an automobile dealership.

Several Wisconsin Republican lawmakers have introduced legislation that, if enacted, would exempt Tesla from state franchise laws. Then Tesla would have the opportunity to open retail storefronts in the state.

It’s funny… Wisconsin, like other states that currently ban Tesla sales, freely allows the sale of German, Japanese and Korean cars. But a high-tech car made here in the U.S.? Forget about it.

In Nebraska, a new bill known as LB 830 would allow a manufacturer with no previous dealerships in the state to set up its own.

If and when the bill is passed, it will pave the way for Tesla to open its own stores. State dealership associations are worried that the bill will allow existing manufacturers to bypass the dealership model too.

The new legislation is a win for the car-buying public.

My guess is that the only folks who are upset are the fat cat dealership owners.

The disruption of the antiquated car dealer model will be playing out in cities and towns all across the U.S. over the next decade.

Owning an EV was always going to be a winning proposition. For Nebraska and Wisconsin residents, the opportunity is fast approaching.

What do you think about the ban on EV sales in certain states? Is this something you’ve experienced in your state? Share your thoughts in the comments sections below.

Good investing,

Dave