The last few weeks have been difficult for Tesla’s direct-sale efforts. After a bill to allow the company to sell its vehicles directly in Texas died last week, now the same effort has failed in Connecticut.
It will complicate the buying process for Model 3 reservation holders in both states who will now have to buy online or arrange a delivery with Tesla in a neighboring state.
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In Connecticut, it is the third time that Tesla attempted to push a bill to allow them to bypass the third-party franchise dealership system in order for them to sell electric vehicles directly to consumers.
The current General Assembly session expired without bringing the latest bill to the vote.
Tesla had been hammering on the state’s budget and on the fact that they are just leaving revenue aside by not going forward with allowing Tesla to sell in the state. A spokesperson said after the bill wasn’t brought to a vote (via ctnewsjunkie.com):
“The residents of Connecticut overwhelmingly want Tesla to be able to freely operate in the state, and despite inaction during this session, we will continue to be a positive revenue option for the governor and legislature as they work through June to close the budget deficit.”
During the hearings for the bill in February, a company executive warned that ‘thousands’ of Model 3 reservations holders will go outside of Connecticut to buy if direct sales weren’t legal by the end of the year.
The Connecticut Automotive Retailers Association (CARA) came out strong against the bill – something it did the last 2 times the issue came up in front of Connecticut legislators. They went as far as sending ‘secret shoppers’ to try to shut down Tesla’s gallery in Greenwich.
CARA was lobbying to retain its monopoly on vehicle sales in the state by using old laws that prohibit automakers from selling vehicles to consumers without going through franchise dealerships. Those laws exist to protect dealership against potential unfair competition against their own automakers, but they are trying to apply them to automakers who have never had franchise dealerships, like Tesla.
Jim Fleming, president of CARA, was pretty happy with the outcome:
“We are incredibly grateful to the members of the General Assembly for holding true and protecting a growing industry in Connecticut. Today, under current law, any auto manufacturer can sell their product in Connecticut through the consumer-driven franchise system.”
Tesla has often expressed that it has no intention to use the franchise model. A recent study on the electric vehicle shopping experience partially gave reason to Tesla and found that a lot of dealerships are not even charging electric vehicles on their lots resulting in potential buyers not being able to get test drives.
House Speaker Joe Aresimowicz said that they wanted a compromise, but Tesla wouldn’t bend on its position:
“We just weren’t able to get there. Ultimately we’ll land somewhere in between. I believe Tesla will happen in the state of Connecticut, I just don’t know when.”
Last week, Tesla promised to open 10 stores in Connecticut by the end of next year if they were made allowed to sell in the state. Unfortunately for local Tesla owners and Model 3 reservation holders, it doesn’t look like it’s going to happen right now.
Update: Tesla actually plans to go forward with the stores as “galleries” regardless of the legislation siding with them on the direct sale issue.