Tesla takes on car dealers in a fight to the death

The dealer-based system was obsolescent even before the Internet, which is why Detroit automakers tried to streamline it decades ago, only to be thwarted when dealers turned to state legislatures for protection.

As Web-based retail sales of other products began to take off in 1999, a General Motors executive said publicly that 80 percent of new-car sales could be factory-direct orders made online by 2003. He forgot about the dealer lobby, which mobilized to win state bans on Internet sales by anyone except an existing licensed dealer.

The laws’ purpose, and effect, is to head off innovation. Of course, changes might make the car-buying experience more pleasant and less expensive for consumers — but cut dealers’ profits or put them out of business altogether. This is why dealers see Tesla as a mortal threat and are fighting it accordingly.

Meanwhile, even more radical alternatives to conventional dealerships are in the works. Many were on display at the just-completed three-day “Hackomotive” conference in Santa Monica, Calif., sponsored by the automotive Web site Edmunds.com.

Join the conversation as a VIP Member

Trending on HotAir Video