During this year’s regular session of the legislature, the legislature passed and Governor John Bel Edwards signed a law strengthening the state’s ban on the direct sale of automobiles. Instead, all automobiles in Louisiana have to be sold through dealerships. SB 107 was so noncontroversial that it did not generate a single vote against in either the state House or Senate.
Now JBE is trying to work out a deal with Tesla’s Elon Musk in order to sell the electric cars in the state.
From the Baton Rouge Business Report:
Louisiana Gov. John Bel Edwards met with Tesla CEO Elon Musk over the weekend in an effort to strike a deal to allow the U.S. electric automaker to sell its vehicles in the state.
The meeting comes a little over a month after the governor signed legislation restricting Tesla’s direct-to-consumer sales model, firming up the long-standing industry practice of requiring third-party dealerships to sell vehicles. Tesla at the time chastised the law, which was the latest setback in the Palo Alto, California-based firm’s efforts to push through favorable state-level legislation throughout the country.
The governor sought out the private meeting with Musk, the billionaire behind SpaceX and other tech firms, while at the National Governors Association’s meeting in Rhode Island, says Deputy Chief of Staff Richard Carbo. Edwards hopes to craft a compromise that allows Tesla sales but also appeases the Louisiana Automobile Association—which ushered through the previous law earlier this summer—before the regular legislative session next spring.
“Tesla has worked with other states to implement plans that are supportive of local auto dealers,” Carbo says in an email. “The governor’s goal is to have these conversations sooner, so when the next regular session begins, there can hopefully be an agreement in place.”
On paper, there really doesn’t need to be a deal. Tesla can sell its vehicles in Louisiana, through independent automobile dealerships. But Tesla doesn’t do that. Instead, Tesla sells through the internet and through company-owned stores.
On the other hand, let’s call SB 107 what it is: a crony capitalist piece of legislation that benefits special interests. In a free market, Tesla would be allowed to have its sales model and sell cars directly. Who knows what a “deal” would look like that would please Tesla and the automobile dealers.
What is likely to happen is a classic Louisiana crony deal. Tesla will be granted an exemption from the rules in exchange for doing favors to Louisiana’s politicians. That’s bad news for everyone involved.
If JBE really wanted Tesla in Louisiana, he would’ve vetoed SB 107. Now it provides a shakedown opportunity for JBE he can’t refuse.