Law Rigged for Auto Dealer Establishment Keeps Tesla from Pitching Cars in Mall

South Dakota’s automotive dealer lobby is trying to keep Tesla out of South Dakota’s market. I should be irate at the car dealers for rigging the market to protect themselves from competition, but if the Republican/Prostrollo lobby is sticking it to Elon Musk, I ought to celebrate, right?

Ah, but I still believe in the fair market, I don’t trust salespeople, and injustice for one, even for Elon Musk, is injustice for all, so I’m going to have to take Tesla’s side.

Tesla sells cars directly to consumers, skipping the costly and complicated business of setting up franchises and farming out sales, service, and customer relations to middlemen. South Dakota and some other states hinder direct-to-consumer car sales with dealer licensing requirements cleverly crafted by the auto dealers lobby to protect the middlemen’s privileged market position. Good capitalists applying for a dealer’s license in South Dakota must certify that they are either franchised by a vehicle manufacturer or are selling used cars. They must certify that they will do business at a physical location where the Department of Revenue can inspect all their books, records, and files and where they have “sufficient space to adequately store all vehicles offered for sale.”

Without franchisees and physical stores, Tesla can’t get a dealer license. Without a dealer license, Tesla can’t even display cars at the mall:

The situation stems from a Tesla informational kiosk that was set up in The Empire Mall that was shut down near the start of October. The group says they were shut down by the South Dakota Department of Revenue (DOR) due to licensed-dealers law.

According to South Dakota codified law 32-6B-87: “A vehicle dealer licensed in this state may lease space in the common area of a shopping mall for the display of new vehicles without a supplemental license if the shopping mall is located within the corporate limits of the municipality where the dealer maintains its principal place of business.”

…Tesla does not operate traditional franchised dealerships. Instead, it owns and runs its stores, galleries and service centers.

Christine Erickson, President of the [South Dakota Auto Dealers Association], said the law was enforced not because of hostility to electric vehicles or innovation, but because all manufacturers — traditional or new — must abide by the same rules.

“These are really done in order to create a level playing field and protect the consumers and to ensure accountability,” Erickson said. “The second largest purchase that anyone makes is a car purchase, and that’s really important to make sure that the system is there to protect the consumer and making sure if there’s an issue with the car, they’ve got a place to fix it” [Michael Doorn, “EV Group Advocating for Change to SD Dealership Law,” KELO-TV, 2025.10.13].

Level the playing field, protect consumers, ensure accountability… that’s lobbyist-speak for make Tesla use the same bloated rent-seeking system that preserves us middlemen’s wealth and power. Wouldn’t good capitalists tell us that competition levels the playing field? Wouldn’t anti-nanny-staters tell us that consumers can protect themselves by making wise choices with their own money about the kind of cars they want to buy and the kind of people they want to buy them from? Wouldn’t free marketeers tell us that the market ensures accountability by allowing information to flow freely right alongside capital so that people will hear quickly if anyone is selling lemons or providing shoddy service and thus stop doing business with bad manufacturers and dealers?

But auto dealers, some of the richest and most influential people in the political scene, need the state to protect their business model.

I’m not rooting for Elon Musk. But suppose some young innovator found a way to 3-D print complete, customizable, and reliable automobiles. Suppose she set up her printer in a shop in Madison and started taking orders and printing cars. Why should South Dakota law require her to contract an SDADA middleperson to sell her cars for her and reap profits on her innovation when she’s able to sell cars for a few thousand dollars cheaper by her own efforts?

A nameless, faceless Facebook group, “South Dakota EV Fair Access“, has popped up to protest Tesla’s booting from the mall and maybe lobby for changes in the law. KELO-TV associates one Tayler Owens with the FB group, and Owens says the otherwise nameless group will push lawmakers to “establish EV-specific legislation allowing direct-to-consumer models.”

But hold up: why EV-specific? Why not allow manufacturers of any kind of vehicle—electric, gas, diesel, hydrogen, steam—skip the middlemen and sell direct to consumers? We all want a level playing field, right, Tesla astroturfers?