Car Buyers Get Hijacked by Crony Capitalism

Tesla cc

We have given Tesla a hard time as a beneficiary of crony capitalism. The special loans given to the electric car manufacturer by the Department of Energy and guaranteed by the taxpayer are unfair and great examples of the “green cronyism” we’ve seen with the Obama administration.

But Tesla Motors is a victim of crony capitalism too. The big car dealers don’t want manufacturers selling cars directly to customers the way Tesla does so they have made life difficult for the new entrant.

Ever wonder why one can’t buy a Toyota from and have it delivered right to one’s door? One can buy nearly everything else that way.

The reason is that the car dealers have lobbied to make sure such practices are illegal in most places. Direct sales cut the dealers out of the picture.

Such a system would likely lower the cost of the product for the consumer, would allow for more customization, and possibly better service (if car companies used reps to handle service issues etc.).

But the car business is an industry which breeds crony capitalism at nearly every level. Between the highway system, the unions, the government loans and bailouts, the government auto contracts, and the sweetheart deals for the dealers, it’s a wonder any car business is done at all.


Texas is virtually closed for business. The Austin American-Statesman reports: “You can visit one of the two galleries Tesla Motors operates in the state — one in Austin, the other in Houston — but employees can’t tell you how much the car costs. They can’t offer you a test drive. They can’t even give you their website address. And if you buy one, the car is delivered by a third party — in a truck that’s not allowed to have Tesla markings.”

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