There are few phenomena that bother government officials more than when the disadvantaged find a way to legally avoid complying with the law. Despite the best efforts of lawmakers to control our behavior, the cleverest among us will find a way to get what they want.
Such is the case with luxury electric-car manufacturer Tesla, which is prohibited from selling new cars directly to consumers in Connecticut. How could that be, you ask? Well, since the Great Depression, Connecticut has been one of a dozen or so states that prohibit car manufacturers from selling new cars directly to consumers, forcing those customers to travel out-of-state to take delivery.
Tesla does have a showroom in Milford, Connecticut, but it’s only permitted to lease the vehicles. If they want to purchase a new Tesla, Connecticut consumers must travel to such exotic locations as Natick and Mount Kisco. The logical next question would be why Connecticut has such a knuckleheaded law when our neighbors, Massachusetts and New York, do not? We’ll get to that in a moment.
Not surprisingly, Tesla has found a workaround against the law forbidding direct manufacturer-to-customer sales of new cars: open a direct-sales facility on the property of Mohegan Sun, the casino resort owned by the Mohegan Tribal Nation on sovereign tribal lands where many state laws do not apply. Interestingly, the Mohegan Sun press release announcing the deal last week made no mention of Tesla’s circumvention of the arcane law.
As my colleague Hugh McQuaid reported last week, Tesla uses a direct-sales business model, meaning consumers can view and test Teslas at showrooms, order the vehicles online and pick them up at stores such as the one that will be at Mohegan Sun. Unlike most other brands, where a licensed dealership takes its cut of new-car sales, Tesla customers can save money by cutting out the middleman.
That makes sense to me and most consumers. But of course the auto dealers see their interests threatened by this precedent and, like package store owners, they’re terrified that they won’t be able to rely on the state to protect them from meaningful competition.
Connecticut Automotive Retail Association Chairman Hayden Reynolds responded with the usual sophistry about respecting tribal sovereignty but insisting that “Connecticut’s dealer franchise laws benefit consumers and provide a competitive marketplace.”
As I wrote in 2016, the industry insists that the absence of a network of dealerships will have an adverse effect on the manufacturer’s ability to deal with mass recalls. Or if a manufacturer goes out of business, there will be no place to take the car for dealer-quality service. But Hayden’s group seems to be saying that even if consumers know that information upfront, they simply aren’t intelligent enough to make their own decisions about assuming such risks.
There is only one group that benefits greatly from the current arrangement: the legacy auto dealerships. Consumers lose in any deal in which goods and services can only be sold through one type of outlet. It’s an anti-competitive practice that should be done away with.
Previous attempts to change the law have failed, so Tesla threw its hands up and tried something different. I never thought I would be saying this because I think he’s ruined the social media platform formerly known as Twitter. But good for Tesla CEO Elon Musk.
A Saudi Connection to the Lamonts
Gov. Ned Lamont started his week doing some damage control over recent revelations that the venture capital company of his wife, Annie, had a business deal with a Saudi-backed investment firm.
The deal between the Stamford-based Oak HC/FT and Sanabil Investments raised questions about transparency, even though Lamont maintained he did not know about the deal until it was first reported by former television reporter George Colli on his website and later by former state lawmaker Kevin Rennie at Daily Ructions.
Oak was listed as a “venture and growth fund” partner on Sanabil’s website, though the page appears to have gone dark recently. Fortunately, the Wayback Machine saves everything, so I retrieved the list here.
Lamont further asserted that Oak’s alliance with Sanabil did not affect his actions or any public statements he has made on the controversial Saudi royal family, a feudal monarchy known for brutal tactics such as the murder of Saudi dissident Jamal Khashoggi, a Washington Post columnist who was dismembered five years ago in the Saudi consulate in Istanbul.
And Lamont’s profession of innocence is probably true. Trouble is, when news surfaced that his 2022 GOP rival for governor Bob Stefanowski also had clients in Saudi Arabia, Lamont raised questions of his own:
“I can see why somebody running for office would want to hide that from the public,” Lamont told reporters last October in Bloomfield. “Signing a deal with the Saudis right after the assassination of Khashoggi raises questions about judgment.”
Oops. Pot, meet kettle.
There are differences, of course, between Lamont’s and Stefanowski’s predicaments. When confronted with proof of the connection between the First Lady’s firm and the Saudi family, Lamont acknowledged it. Presented with questions about his own work in connection with the royal family in Saudi Arabia, Stefanowski initially refused to talk, insisting that he was bound by nondisclosure agreements with clients.
When that didn’t pass the smell test – after all, if he had no business in Saudi, there would be no NDA to honor – he finally acknowledged that he has performed work as a consultant on a futuristic, green-energy city proposed by Saudi Crown Prince Mohammed bin Salman. A CIA investigation had earlier concluded that the Saudi dictator ordered the murder of Khashoggi.
Because of the way the two incidents were handled, one of them had a much longer shelf life. Lesson: come out and acknowledge the worst right away rather than let it fester and come out in drips. After that, additional details will seem insignificant and perhaps irrelevant. You can ask Ed Meese and the ghost of Ronald Reagan …
