Dealers and Tesla come to terms in NY and Ohio while other states review options
New York Governor Andrew Cuomo announced an agreement late last week between Tesla and the two state dealer associations that was praised by all parties. Tesla will keep the five stores it already has in New York, and additional Tesla retail locations will be established under a strengthened dealer franchise law.
This agreement will serve as a model for other states as they consider how to accommodate Tesla and a distribution system that has served the public well, said Lou Roberti, chairman of the New York State Automobile Dealers Association.
Neale Kuperman, chairman of the Greater New York Automobile Dealers Association added, This reaffirms the stateês longstanding goal that cars sold through the dealer franchise system serve the consumer and their best interests.
The legislature in Ohio passed a bill allowing a third Tesla retail outlet in the state, signaling a comprimise between dealers there and Tesla. The bill would allow Tesla to open a third direct-sales store, but would bar direct-sales outlets by other manufacturers.
Nobodyês happy with the solution, but it is a resasonable approach that allows predictability into the future for the dealer model, Ohio Automobile Dealers Association (OADA) President Tim Doran told Bloomberg News.
Added Diarmuid OêConnell, Teslaêa vice president of business development, I do think the Ohio solution points to a way dealers and Tesla can resolve this issue for the present, while letting both sides see how this develops, reports the Wall Street Journal.
OADA asked for the bill to keep other automakers from setting up direct-sales stores, according to the Northeast Ohio Media Group. General Motors also supported the proposal. The billês sponsor, Sen. Tom Patton, a Republican, said the legislation protects the franchise system and the stateês 60,000 dealership employees, but still keeps Tesla in Ohio.
Ohio Senate President Keith Faber, another Republican, said the final bill lets automakers know that if youêre a manufacturer and you want to sell, you have to sell through dealers, the Columbus Dispatch reports.
In New Jersey, a bill has been introduced in the state legislature to reverse the Motor Vehicle Commissionês recent ruling that Tesla must close its two direct-sales stores in the state by April 1. Democrat Assemblyman Tim Eustace has said he doesnêt like the idea of anyone who wants to buy a Tesla in New Jersey being sent to New York or Connecticut.
The New Jersey Coalition of Automotive Retailers has said it will continue to watch the matter closley.
We hold as sacrosanct the franchise system, NJCAR President Jim Appleton told Automotive News. There is no resolution to this problem that allows Tesla to operate outside the franchise system forever. But weêre open to accommodations if Tesla can make the case that thereês a reason why they canêt.
As contenders for Teslaês $5 billion battery, Gigafactory, Arizona and Texas are considering legislative approaches that would allow Tesla to retail cars in those states without dealers.
In Florida, Sen. Marco Rubio (R), a potential presidential candidate, has indicated heês fine with Teslaês direct sales model, telling CNBC recently, Customers should be allowed to buy products that fit their needs. In response, Ted Smith, president of the Florida Automobile Dealers Association, told Automotive News, Iêm surprised by Sen. Rubio intertwining Tesla with laissez-faire economics.
Looking beyond the accord reached by dealers and Tesla in New York, the New York Times ran an editorial supporting Teslaês ealier efforts to overturn auto dealer franchise laws.
On 60 Minutes last Sunday night, March 30, CBS did an extensive segment on Tesla which did not reference franchised auto dealers or state auto sale licensing laws limiting or prohibiting direct sales to consumers by automakers.Download Bulletin PDF