Tesla’s Triumph in Florida’s Direct-Sale Ban

Florida Governor Ron DeSantis recently enacted legislation that further reinforces the prohibition on direct-to-consumer car sales. However, a distinct exception has been made for Tesla. The law, known as HB 637, restricts any automaker that has ever operated through a franchise in Florida from directly selling their vehicles to consumers. Interestingly, this doesn’t apply to Tesla or other new electric vehicle (EV) brands like Lúcido y Rivian, who never had a dealership agreement in the state.

The new legislation, set to take effect on July 1, also limits the ability of a manufacturer to determine how much a dealership charges for its vehicles. It curtails the manufacturer’s power to use inventory to encourage lower prices as well.

Dave Ramba, a lobbyist for the Florida Automobile Dealers Association (FADA), a strong supporter of the bill, believes that if automakers exclude dealers, it would result in “higher prices and less customer service to the public.” FADA argues that dealerships instigate substantial price competition, guard against manufacturer monopolies, and provide crucial services, such as test drives, warranty and recall support, and ease the complexity of vehicle registration.

Critics of the dealership model argue that it adds an unnecessary intermediary, aggressive sales tactics, and layers of markup and fees. While dealership proponents claim these fees would still exist regardless of the seller, Federal Trade Commission members have suggested that removing prohibitions on direct sales could enhance competition.

Tesla’s exception from the legislation comes as no surprise, given their reported successful lobbying efforts. The initial versions of the bills aimed to ban all direct-to-consumer vehicle sales in the state, including Tesla. However, lobbyists for Tesla successfully negotiated new terms for the legislation to keep their Florida operations intact.

While it might seem that Governor DeSantis’ approval of Tesla’s exception is linked to his support from Elon Musk, political contributors to DeSantis also include auto dealers who have donated over $2 million in the past two years. Hence, it’s essential to note that political motivations may be diverse and not solely based on Tesla’s interests.

In essence, HB 637 further restricts direct-to-consumer vehicle sales in Florida while making an exception for Tesla and other new EV brands. While dealerships argue for their importance in maintaining competitive pricing and customer service, critics see them as unnecessary middlemen. The debate continues as to the best model for selling vehicles to consumers.