The Revolution Will Proceed, With or Without Holman Jenkins Jr.

Once again, Holman Jenkins Jr. is defending the bad guy, this time in “Tesla Seeks Loophole, Not a Revolution” (see here for our previous beef with the Wall Street Journal op-ed page writer).

The “bad guy” Jenkins sticks up for in this weekend’s op-ed is not an individual, however, but rather the system of entrenched car dealers who have tried to shut out Tesla from selling its cars direct to consumers, with no “franchisee” in between, in various states around the country.

What’s wrong with selling cars direct? According to Jenkins, nothing, really. He agrees the dealers are only “protecting their anticompetitive interests” by shutting down Tesla-owned outlets.

But the way Jenkins sees it, Tesla CEO Elon Musk doesn’t really want to open up the system, he’s just “browbeating a few states into carving out friendly exceptions for Tesla.”

What bugs him even more is that Tesla’s electric-car buyers benefit from federal and state tax rebates, although if Jenkins had ever spoken with an actual Tesla owner (which hasn’t seemed to cross his mind) he would discover that none of them bought the car for the tax credits: they bought it because it’s a great car that happens to recharge (and download software upgrades) while they sleep, no gasoline required.

As often in Jenkins’ pieces, there is fuzzy logic to his knee-jerk defense of the bad guy: in this case, he uses the fact that GM has been selling direct in Brazil “for a decade” to make the case that what Tesla is doing is somehow less-than-ethical—but it’s not fathomable the way it’s written.

Go ahead, try to figure out how this fits:

His [Musk’s] bluster about a politically-favored gasoline oligopoly resisting its doom rings even hollower given that GM already has been practicing for a decade in Brazil the direct-sales approach that Mr. Musk preaches. Everybody wins: Buyers are willing to pay more for a car if they can get exactly the trim package they want rather than settling for the closest available facsimile on a dealer’s lot. Chopped out of everyone’s overhead is the enormous cost of maintaining a wide dealer inventory.

But direct-sale may work better with an entry-level car like the Chevy Celta that GM sells in Brazil or a hobbyist item like Tesla peddles to dilettantes and early adopters. Once Tesla makes its hoped-for transition from a niche business to a volume manufacturer, with mainstream customers who expect to make serious demands on the product, even Mr. Musk has suggested a franchise dealer network may be the way to go. If so, expect much of his current rhetoric to disappear down the memory hole though he’s quite right on the substance of his critique of dealer-protection laws.

If anything, the fact that GM sells direct in Brazil should be enough to satisfy both Jenkins and the American powers-that-be that selling cars direct will not end the world as we know it. But Jenkins doesn’t see it that way.

He’s sees Tesla as “a hobbyist item,” a toy for rich people—hypocrites who depend on tax favors to show off on weekends.

But the Tesla is no “hobby.” In 2013, as Jenkins would know if he did a little research, the Tesla Model S outsold its luxury class peers sold by Mercedes, BMW, Lexus, Audi and Porsche.

And Elon Musk is no hobbyist.

As, again, Jenkins would know if he did a little research, it was Elon Musk who, at the same time he was gearing up Tesla (and paying off the government’s loan faster than his internal combustion engine counterparts), found the time to create SpaceX, which has already accomplished something that a) nobody thought possible and b) ought to appeal to Jenkins’ private sector instincts: he brought the cost of launching satellites down by more than half, and helped NASA resupply the space station in the process.

And he did it faster than any government-subsidized, Washington lobby-dependent Lockheed or Raytheon could have done it.

The revolution will not be broadcast on the editorial pages of the Wall Street Journal if Holman Jenkins has anything to do with it.

Jeff Matthews

Author “Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett”

(eBooks on Investing, 2013) $4.99 Kindle Version at Amazon.com

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