The Beltway
An occasional column by Gabe Nelson, Automotive News' D.C. correspondent, analyzing the auto industry's relationship with Washington.
GABE NELSON

Why Tesla vs. dealers debate could become a 2016 presidential talking point

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Gabe Nelson is a reporter for Automotive News and is based in Washington, D.C.
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WASHINGTON -- It’s looking like Tesla’s corporate-owned showrooms could be a political flashpoint in the 2016 presidential election, now that Sen. Marco Rubio, R-Fla., has come out as a defender of Tesla’s right to sell cars without franchised dealers.

Rubio, a rising GOP star who is widely expected to run for president in 2016, said today on CNBC program “Squawk Box” he has no qualms with Tesla’s business model.

That puts him in opposition to one of his likely Republican rivals, New Jersey Gov. Chris Christie. Two weeks ago, the New Jersey Motor Vehicle Commission adopted new licensing regulations that prevent direct sales. Tesla contends Christie went back on his word to delay the regulation. Christie denied that, but said Tesla would have to go through the Legislature to change the existing law. A bill is now pending there.

"It's an established product," Rubio said of Tesla’s cars in the TV interview. "Customers should be allowed to buy products that fit their need, especially a product that we know is safe and has consumer confidence beneath it."

As we at Automotive News have been reporting for a few years now, Tesla is waging a state-by-state battle against well-financed dealer groups, which see the company’s go-it-alone approach as a threat to franchised dealers’ business model.

By taking up Tesla’s side and insisting that “regulations should never be used as a defensive weapon by an established industry or an established company,” Rubio is positioning himself to be the free-market champion in the Republican primary.

That sheds light on a crucial rift within the GOP.

Some politicians within the party tend to bend over backward for established businesses, such as franchised dealers, which they see as crucial to the economy.

These lawmakers see Tesla as a threat to dealerships that employ scads of people in their districts and pay a huge amount of sales taxes. Never mind if customers like Tesla’s approach -- these lawmakers worry that if people buy cars over the Internet, or from a small number of centralized stores, these jobs and tax dollars will disappear.

But there is an increasingly vocal libertarian faction within the GOP that favors free markets across the board, even if it hurts incumbent businesses like franchised dealers. These free-market Republicans tend to be younger and more urban than the party’s average voter -- just the demographic that admires Tesla.

Texas Gov. Rick Perry, who ran for the Republican nomination in 2012 and might run again in 2016, said Monday in an interview with Fox Business News that he favors a review of a Texas law that bars manufacturers from selling cars directly to customers.

But he did not explicitly endorse Tesla’s right to sell cars as Rubio did.

“We live in a different world than we did 30 years ago, 10 years ago,” Perry said in the interview. “I think it’s time for Texas to have an open conversation about this.”

Rubio, meanwhile, clearly is trying to appeal to Tesla’s demographic.

That’s why he visited the Washington, D.C., office of the black-car service Uber on Monday. Uber, popular with young, urban professionals, is fighting across the country with incumbent taxi companies for the right to serve customers. Sound familiar?

So don’t be surprised if this becomes a 2016 refrain -- a way for Rubio to paint Christie as a tool of big business, rather than a friend of free markets.

CNBC asked Rubio to explain why Christie signed off on the Tesla ban.

Rubio replied: "I don't know. You'll have to ask him."

You can reach Gabe Nelson at gnelson@crain.com.


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