Tesla Loses Direct Sales Fight In Connecticut And North Carolina

For the second year in a row, Tesla has lost its bid to sell its automobiles directly to customers in Connecticut, thanks in large part to fierce opposition from General Motors. Prospects were brighter for Tesla this year. Legislation allowing the company to open direct sales stores in Connecticut had the support of senate majority leader Bob Duff and Antonio Guerrera, co-chairman of the house transportation committee. “Tesla is prepared to make a real and lasting commitment to Connecticut,” said Will Nicholas, Tesla’s government relations manager. “We want to invest here. We want to create jobs here. And we want to serve Connecticut customers.”

But it was not to be. At the last moment, a full court press orchestrated by General Motors caused an agreement among Connecticut’s Democrat party members in the legislation fell apart. “Without an agreement I couldn’t bring it to a vote in the Senate,” said Duff, who vowed the revisit the issue next year. “New car dealers and GM are powerful lobbyists,” he said.

Representative Guerrera told the CT Post, “It was my impression that the Senate was trying to work this out among the members of the Democratic caucus. In light of the economic situations we’re enduring right now, I think that it’s a great opportunity for us to enhance a new business like Tesla to come to the state.”

Late Monday afternoon, Tesla put a new proposal on the table. In exchange for permission to sell direct to customers in Connecticut, it said it would construct a regional distribution center in the state. The facility would add 150 jobs paying between $40,000 and $100,000 a year. Each of the three proposed company stores would add another 25 good paying jobs within Connecticut. The offer came too late, however.  Senator Duff told Fox News late on Monday that Tesla could have put the proposed distribution center idea forward months ago if it was truly serious. Tesla must now wait until next year to try again in Connecticut.

Meanwhile, a similar drama is playing out in North Carolina, where once again a powerful lobby of franchise dealers is doing everything in its power to block Tesla from selling direct to customers in the Tar Heel State. According to CleanTechnica, race car driver and Tesla owner Leilani Münter submitted written testimony to North Carolina officials, pointing out that 93% of residents say they are in favor of Tesla being able to sell direct to them. But once again, it appears the dealer’s association has enough political muscle to keep legislation favorable to Tesla from passing.

What are dealers so afraid of? For one thing, they have billions of dollars invested in their franchises and are worried that Tesla will put them out of business. The truth is, Tesla very well may do precisely that. The irony is that franchise dealers have shown a stunning disinterest in selling electric cars. They are pedaling furiously to protect a business model that is out of date. Like the dinosaurs, they are already dead. They just don’t know it yet.

Chevrolet says it is working hard to get its dealers on board. But why is it like pulling teeth? Why would GM work so hard to protect people who show little or no interest in selling the products the company makes? Someone smarter than me will have to answer that question. In the meantime, Tesla is going full speed ahead with its plans to bring the Model 3 to market. It is so confident about its new car, it says it will be selling a half million cars a year by 2018 — two full years sooner than its previous expectations.

What is happening in state legislatures around the country proves beyond a doubt that most local politicians could care less about the public interest. Their only interest is in staying in power and reaping the largest campaign contributions possible. The will of the people be damned.

Sources: CT Post and CleanTechnica.  Photo credit: Leilani Münter

Tesla Fights On In Utah And Connecticut

Just as the Kook Brothers are fighting a losing battle against electric cars and renewable energy, the car dealers in several states continue to oppose allowing Tesla to sell its cars direct to consumers. Last year, Tesla spent $3,000,000 building a stunning new showroom in Salt Lake City, Utah, only to be told two weeks before it opened by the state’s Attorney General that Utah law prohibits auto makers from owning dealerships. Under the AG’s ruling, people could go to the Tesla store to look at cars and get repairs, but were prohibited from taking test drives, discussing prices, or buying a car while there.

The Utah legislature took up the matter, but ended up passing a bill that allows people to buy a car at a Tesla store but forces Tesla to ship each car purchased into Utah from out of state. The company cannot maintain an inventory of cars within the state. Tesla is challenging the law in a legal action that is now before the Utah Supreme Court.

“If Utah is really about free markets, if it’s really about innovation, if it’s really about new business models that provide the consumers with choice, why would you restrict that?”asks Jim Chen, the company’s vice president for regulatory affairs. Governor Gary Herbert wants Tesla to be able to sell in Utah, even mentioning the company in his State of the State speech. He is  hoping lawmakers can work something out before the session ends, spokesman Jon Cox told ABC News.

Tesla says that it can’t sell its cars through traditional third party dealerships because they have to convince customers electric cars are better than a car with a traditional internal combustion engine. Tesla maintains that constitutes a conflict of interest for conventional dealers, whose major source of income comes from selling ordinary cars.

Support for regular dealers is eroding. This week. Cadillac boss Johan De Nysschen proposed a new system for smaller dealers that sounds a lot like the Tesla plan. Customers would view new cars on virtual reality devices, then order them online. Cadillac would fill the orders from cars available at regional distribution centers.

Tesla is also renewing its effort to get the state of Connecticut to change its law prohibiting direct sales. A bill approving the change passed the Connecticut House of Representatives last year but died in the Senate after Connecticut’s dealer association mounted a furious opposition.

“We believe we would fail if we were to sell through third parties, because third parties aren’t fundamentally as interested in selling electric cars as we are,” Diarmuid O’Connell, Tesla’s vice president of corporate development, told Connecticut Magazine. “Connecticut residents have to drive to New York or Massachusetts, and that’s an inconvenience,” says O’Connell. “They can also buy them online or over the phone, but this is a high-touch purchase. People want to be able to go in and literally kick the tires and drive the car.”

The bottom line is, franchise dealer laws are so over. In a couple years, people won’t even remember what all the fuss was about. Once Tesla kicks down the door, other manufacturers, including the Big Three in Detroit, will probably be only too glad to come thundering through.