After a small win in Indiana, where a state Senate committee decided to table for further review a bill that would have prohibited Tesla to sell its cars directly to consumers and forced them to go through third-party auto dealerships, the automaker is readying to challenge the states of Utah and Connecticut over similar direct sale laws.
Connecticut Senate Majority Leader Bob Duff introduced a bill that would allow electric car manufacturers to sell their vehicles directly to Connecticut consumers. The bill would represent a compromise similar to agreements Tesla has in other states like New Jersey or New York, where the automaker is limited to a certain number of stores, in the case of Connecticut, it would be three stores across the state.
Yesterday, the Connecticut Automotive Retailers Association (CARA) and GM held a joint press conference against the bill and instead plead for Tesla to sell through third-party franchise dealerships. CARA President James Fleming said (via CTMirror):
“Noticeably missing but nevertheless welcome in this lineup of dealers and manufacturers is Tesla. We would welcome them to join us in the franchise system today, as we have asked them over the past couple of years when they’ve come in to visit the state of Connecticut.”
Tesla General Counsel Todd Maron recently argued before the FTC, which took a stand against direct sales prohibition, that the automaker wouldn’t thrive under a dealership model because independent dealers make most of their profit from servicing cars while electric cars have little long-term maintenance and fewer moving parts.
Landon Fulmer, vice president of state affairs for the Alliance of Auto Manufacturers, added
“What we want to make sure we have is one set of regulations for everybody who’s going to compete in this marketplace. We don’t need carve-outs, we don’t need loopholes. We need to make sure everybody plays by the same rules.”
They would prefer that the rules would force everyone to go through third-party franchise dealerships, something several new startup automaker tried in the last few years, including Fisker Automotive, but most of them went under. Coincidently (or not), Tesla is the only new automaker to have success in the US and it uses a direct sales model.
Tesla created a website to encourage people to take action and help pass the bill by contacting their representative. Jim Chen, Tesla’s vice president of regulatory affairs and deputy general counsel, said in a statement:
“By raising this bill, they are sending a clear message that Connecticut is ready to embrace innovation, economic growth and consumer choice”
The website is a response to CARA’s own ‘TeslaCrash.com’ website published last year when the bill was first announced (it has since been parked). The website was using questionable methods to try to discredit Tesla, including featuring pictures and articles about benign accidents, hence the name of the domain. You can see some screenshots of the website on Jalopnik, which described the site:
“The alarmingly-named Tesla Crash website has a logo with a wrecked car (not a Tesla) and blood-red, splattery typography. You’d think it’d be a warning site about how Teslas have a secret “Murder Mode.” It’s really just a bunch of Connecticut car dealers afraid of not getting to make more money.”
A hearing of the Transport Committee over Tesla’s sales will be held tomorrow:
While Tesla is going through the legislative process in Connecticut, the company seems to have given up on Utah’s legislators and instead plans to focus on a lawsuit filed before the Utah Supreme Court.
Tesla built a $3 million store in Salt Lake City last year, but the full-fledged store was demoted to a gallery/service center two weeks before opening due to the Utah attorney general’s office ruling that it was against the state’s direct sales law.
The location can service Tesla’s vehicles and potential buyers can go to the store to look at the Model S, but they can’t buy, discuss the price or take a test drive from Tesla employees. Now the state is trying to pass a new Utah HB 384 bill to put even more restrictions on Tesla’s business model.
Today at 8 am local, the House Business Labor Committee will hold a hearing over the matter and Tesla will try to get it stopped in order to focus on the fight in the Supreme Court.
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