Last year, Tesla became the seventh most valuable company in the world.
Even with this success, Tesla has long fought with the auto industry over attempts to sell its cars directly to consumers. Currently, only 27 states allow for the direct sale of Tesla motors to consumers. Not only is Louisiana one of the states that does not allow direct sales, but this is also cited as the justification for attempting to close the state’s only service center for Tesla vehicles.
Even without direct sales, Tesla vehicles are still on the road in Louisiana as well other states. Many Louisianans purchased their vehicle in a state that allows direct sales before driving them to the Pelican State. Since Tesla has a legal obligation to repair these vehicles, the company set up service centers to make sure consumers can get their vehicles repaired across the nation. While far from ideal policy, this system seems to have placated the special-interest auto dealers to leave Tesla alone.
But not in Louisiana. The Louisiana Motor Vehicle Commission recently sent a motion to compel Tesla, saying that because the company doesn’t possess a motor vehicle dealers license issued by the commission, it is in violation of the law by servicing their vehicles. Of course, this is in direct conflict with the other Louisiana law that states that Tesla has an obligation to repair its vehicles under warranty since only Tesla has the knowledge to do the repairs.
Who is the Louisiana Motor Vehicle Commission might you ask?
The commission is appointed directly by the governor and made up of incumbent auto dealers, many of whom lobbied to prevent Tesla from being able to sell in Louisiana in the first place. This is a classic case of a special interest looking to keep out innovative competition. Special interests working against everyday citizens is too common in Louisiana. For example, the state has some of the most draconian occupational licensing laws in the nation. A recent report from the Institute for Justice found that Louisiana licenses the highest amount of the 102 lower-income occupations studied. It also holds the dubious distinction for being the only state to license florists.
There are many other instances of Louisiana turning its back on innovation besides occupational licensing. For example, Louisiana was one of the last states to enact a state framework for ride-sharing companies due to the lobbying of the taxi industry. On top of that, Louisiana’s insider ethos is perfectly captured by a recent high-stakes court battle over whether the governor had the ability to fire and appoint people to the lucrative riverboat pilot board. It’s clear that not enough has changed since the days of Huey P. Long.
The future of Louisiana and innovative businesses won’t be decided over this lone service center, but it does highlight the competing forces fighting for the future of the state. Will Louisiana move away from the Huey Long-style populism that favored insider dealing at the expense of citizens? Or will it embrace innovators and entrepreneurs and welcome the thousands of people fleeing states such as California, New York, and Illinois?
Regardless of the answer, the governor should act and let Tesla service its vehicles while the Legislature removes the restriction on direct sales to consumers. That would be a small but important win for freedom in Louisiana.
Eric Peterson is director of policy for the Pelican Institute, a Louisiana-based think tank.
