As we reported earlier this week, a new bill (HB 7097) is being introduced in Connecticut to allow direct sales of electric vehicles in the state. Tesla is pushing for the bill to pass, while local dealerships are strongly opposing it.
Yesterday, the Connecticut Transportation Committee held its first hearing on the bill during which Tesla and dealerships argued yet again over direct sales.
Tesla’s Deputy General Counsel Jonathan Chang was present for an hour-long testimony during which he warned that there are currently “thousands” of Model 3 reservation holders in the state that will simply go to another state to make their purchases if the bill doesn’t pass:
“There are thousands of reservations in the state from consumers that want to buy this car when it goes into production. We want to be able to conduct those sales here in Connecticut, not have those sales go to New York or Massachusetts or some other neighboring state. They should remain here in Connecticut,”
As usual, the only opposition present against the bill was from local dealerships who feel threatened by Tesla’s business model.
In some cases, dealership representatives even testified that Tesla’s model was more efficient. Jason Vianese, general manager of a local Chevrolet dealership, said:
“Because they’re cutting out the dealerships and selling direct distribution, what could happen is they would have lower expense structure,”
Vianese argued that they are not worried about Tesla’s products and he thinks Chevy’s Bolt EV will compete against Tesla’s Model 3, but only if it’s through the third-party dealership model.
On the other hand, Chang argued quite strongly that dealerships “are not doing their job” when it comes to selling electric vehicles.
He highlighted on several occasions that despite Tesla’s inability to sell in the state, the company’s vehicles account for almost 2/3 of the ~2,000 electric vehicles in Connecticut. He argued that the franchise model wasn’t good at selling electric vehicles considering the vast number of dealerships selling 33 different EV models couldn’t beat Tesla’s 2 models without any store in the state.
The majority of the Transportation Committee seemed receptive to Chang’s arguments, but they were not the problem the last time that this bill was proposed. It passed both the committee and the house, but it was stopped by the state senate.
Considering this is the third try, it will be interesting to see what happens. Will the free market win or will the dealerships maintain their monopoly on car sales?
Tesla recently won in Indiana where it is now allowed to sell directly, but that was hardly a win for the free market since the legislature made a special exception for Tesla and direct sales are still banned otherwise.
With the house bill 7097 in Connecticut as it is currently crafted, it would be a wider victory since while it would only affect Tesla for now, it would be for all electric vehicle manufacturers, which would open the doors for other startups like Lucid Motors or Faraday Future.
Here’s Chang’s testimony (hat tip to ‘Rabid Chinchilla’):