Tesla confirmed this week that it has received approval to expand in Rhode Island. After some confusion over the legality of the automaker’s sales model in the state, the company officially received approval by the DMV.
Like it is the case in a few states still, Tesla’s direct sale business model can sometimes be blocked by old laws prohibiting automakers from operating car dealerships.
There was some confusion over it being the case in Rhode Island too.
Gov. Gina Raimondo brought it up at the National Governors Association last year when Tesla CEO Elon Musk gave a talk at the conference.
At the time, the company had been trying to enter the neighboring state of Connecticut, but it failed to change the law after receiving strong opposition from the dealerships. Gov. Raimondo wanted Tesla to come to Rhode Island, but she feared a similar situation:
“I would like Tesla to be able to sell here. Right now I see Teslas driving around in Rhode Island, they’re being purchased in Massachusetts. It would be a great thing if they could be purchased in Rhode Island so we get the sales tax revenue, frankly, and also for our customers.”
As it turns out, Rhode Island’s law was more relaxed than Connecticut’s on the subject and allowed for Tesla to operate a dealership.
WPRI reported this week:
“A spokesman for the DMV tells Eyewitness News the state law roadblock wouldn’t have stopped Tesla. State law only prohibits car manufacturers who currently sell through Rhode Island dealerships to begin new direct-to-consumer sales in the state, but because no local dealerships currently sell Teslas, the law doesn’t apply.”
The first store in the state is reportedly set to open in Warwick during the first quarter.
That’s refreshing. That law actually makes sense. It’s how those other direct sale laws prohibiting Tesla to operate should have been written. The original purpose of those laws was to block existing automakers to compete with their own franchise dealerships and not to block new companies that never had any dealerships to compete with other companies’ dealerships.
Rhode Island got it right here and it could put even more pressure on neighboring Connecticut.
Tesla buyers in Connecticut have been going to New York and Massachusetts to buy their vehicles. Now they will also be able to go to Warwick if it makes more sense for them.