Mississippi Sides With Dealerships, Complicating Direct Sales Model

Tesla’s direct sales model did one great thing for new car buyers – the middleman was eliminated, so extra costs were cut for both the manufacturer and the customer. Somewhat understandably, this did not bode well with some companies and states along the way. A simple online platform and some simple marketing put an end to third-party involvement and took away a lot of money from established entities in this space. This brought lawsuits, complaints, and all kinds of challenges for everyone.

Fortunately for customers today, the direct sales model is alive and kicking. It withstood the test of time and proved to be so popular that even legacy automakers attempted to do the same thing. But their efforts were quickly shut down by their long-lasting partners who helped brands get rid of inventory.

Ford, for example, wanted to try out Tesla’s recipe and discussed with dealers the prospect of selling EVs at a fixed, non-negotiable price. This publicly began in the summer of last year, and we are yet to hear anything about some success in this regard. Porsche – another carmaker that wants to become an EV-only company – is having a hard time doing the same thing.

But after Tesla proved it was possible to do this without much hassle, other EV makers like Rivian or Lucid followed in its footsteps. Now, instead of the classic dealership, these brands are setting up pop-up shops or just relying on word of mouth and the Internet to find prospective customers. Some stores may appear here and there, but none of the three automakers are interested in working with third parties that may complicate their plans.

Surprisingly, one survey from last year showed that a majority of Americans like dealing with a seller that walks them through the entire process, even if that may mean increased acquisition costs.

That result (and some lobbying) may have encouraged Mississippi’s lawmakers to send the state’s Governor a bill that forces brands like Rivian, Tesla, or Lucid to set up shop in the state through local franchises and not by themselves.

Fortunately, Americans living in the Magnolia State can still go online and order whatever EV they want. But if they prefer to talk to a real person about the entire process and have someone assist them during the whole deal, Mississippians will have to work with a licensed dealership.

Fortunately, the new law born from House Bill 401 is nothing like what Texans experienced for a while when Tesla was not allowed to sell directly to the customer and was forced to ship out the cars in another state before selling them there. Fortunately, that was resolved through home deliveries or by asking customers near an out-of-state service center to come to pick up their EVs or arrange transportation.

What you still can’t do in Texas is the same thing that Mississippi just implemented – you can’t buy a Tesla outright from a store unless the car is sitting at a licensed dealership.