After a recent victory in Indiana, Tesla is making a push to allow its direct-sale business model in Connecticut and bypass the third-party car dealer model.
As the company makes its case and backs a new bill introduced by the Transportation Committee this week, the state dealership association launched its own effort to block the bill, which they managed to do 3 years in a row now.
Tesla has tried in the past to push for new legislations that would enable them to sell cars directly to customers in Connecticut, but the local dealerships appear to have a strong influence in the state.
An early smear campaign by the Connecticut Automotive Retailers Association (CARA) and the fact that GM backed the effort to block the bill didn’t help.
CARA published a website called ‘TeslaCrash.com’ in 2014 when the bill was first announced. 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.
Last year, Tesla made a significant push and even offered a distribution center with 150 jobs to Connecticut in last-ditch effort to pass direct sales bill, but it didn’t work.
They also opened a store in Greenwich (pictured above), which they have been operating as a “gallery” in the meantime, but CARA now says that Tesla is “illegally selling cars” at the location.
Where Tesla is not allowed to sell directly to customers, the company has often employed the strategy to open store-like locations where employees can educate potential customers on their offering and electric vehicles in general, but they don’t actually do any transaction and instead refer interested customers to Tesla’s website or a store in a neighbouring state.
Jim Fleming, President of the car retailers’ group and the creator of the ridiculous ‘TeslaCrash.com’ website, disagrees and said to the Connecticut Post this week in an interview about the renewed effort to allow Tesla’s sales model:
“They are illegally selling cars out of that location in Greenwich.”
It’s not clear what proof he has to back the allegation, but if Tesla can’t even operate locations where it talks to the public about its products, it’s venturing into a free speech debate and not just the current free market debate.
“They are hardly a startup. They have great political influence. Their CEO, as you know, serves on the new president’s economic council in Washington, D.C. They want to compete with a local car dealer, who is tiny compared to a multinational corporation.”
It’s important to note that most dealerships are hardly “tiny” and the industry has consolidated itself over the years and now dealership groups own dozens and sometimes even hundreds of locations.
State bans of direct sales were first implemented to protect car dealer franchisees from having to unfairly compete against the automakers from which they bought their franchises. It makes sense to a degree, but the competition is not unfair if it’s against an automaker that is not competing with its own franchises, like Tesla.
Badly crafted legislations included all automakers in the ban, which prevents Tesla from selling its cars in some states and resulted in dealerships having a monopoly on car sales – even for companies that never had anything to do with the franchise model.
Tesla said this week that despite not being allowed to sell directly in the state, there are about 1,300 Teslas registered in Connecticut, which represents 62 percent of the electric vehicles in the market.
The Transportation Committee will hold a hearing at 12:30 p.m. on Wednesday to discuss the bill.
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