Electric car company Tesla is inching closer to expanding its national footprint of showrooms and dealerships into Connecticut with recently proposed legislation that would enable the company, and others, to sell directly to consumers and bypass dealerships.
“Right now, even test-driving a Tesla requires Connecticut citizens to cross state lines,” said Jim Chen, Tesla”™s vice president of regulatory affairs and associate general counsel. “It shouldn”™t be so difficult for customers to try, and buy, an eco-friendly car that continues to set the forward-moving trends of the transportation industry.”
Proposed by the General Assembly”™s Transportation Committee, Senate Bill 3, An Act Concerning the Licensing of New and Used Car Dealers, was co-sponsored by State Senate Majority Leader Bob Duff.
“Embracing electric vehicles continues the work we have done in Connecticut to bring new and emerging technologies into our state,” said Duff, a Democrat from Norwalk. “Allowing customers to purchase electric cars without leaving the state not only benefits our consumers, but also Connecticut”™s economy.”
Currently state franchise laws require automakers to sell their cars through locally owned dealerships.
Tesla is not directly mentioned in the bill though Duff and chair of the Transportation Committee, Rep. Tony Guerrera touted the company as a model for the future of the auto industry in their announcement of the proposal.
“We need to embrace companies that express a sincere desire to invest and create jobs in Connecticut,” the Democratic lawmaker said. “Tesla is an innovative company that will revolutionize transportation in the coming century.”
The bill would allow electric car companies that do not already have a physical presence in the state to have up to three dealerships in Connecticut.
According to the Hartford Courant, Chen said the company would create from 12 to 24 jobs at each store and generate about $1.68 million in sales tax per year on the high-end vehicles that range in price from $35,000 to well over $100,000
But not everyone is welcoming the company with open arms, particularly the Connecticut Automotive Retailers Association (CARA).
“CARA strongly opposes the ”˜Tesla Bill”™ that would create a sole law carve-out for Tesla that would unfairly compete with locally owned dealerships,” said James Fleming, president of the association. “Without a law change, Tesla can work today within the current franchise system that local dealers have invested in and creates price competition, maintains good paying local jobs in Connecticut and advocates for consumers when there is a recall or defect. Allowing any manufacturer to skirt our existing state laws would clearly create an uneven playing field.”
General Motors has emphasized the association”™s points stating, “Tesla”™s insistence on special rules could result in multiple manufacturers competing with similarly capable vehicles and similar price points, yet operating under a different set of rules.”
“Tesla could open a franchised dealership with an independent operator in Connecticut today, but instead they insist that the state must first provide them with unique rules and special exceptions to suit their own business interests,” GM said in a statement. “In fact, Tesla was willing to agree to a dealer model in Virginia. The Connecticut legislature shouldn’t create a special exemption for them here.”
Tesla supported similar legislation in 2015 that failed to pass and was also met with resistance from dealerships.
Regardless of the current bill”™s fate, Tesla has still found ways to circumvent state franchise laws. The company already lists a showroom location in Greenwich on its website and the Greenwich Time reports they are in the process of requiring necessary permits from the town”™s planning and zoning commission.
According to the newspaper, Tesla states the showroom would be used for the “display of Tesla”™s products and to provide educational opportunity to inform people about the advantages of electricity storage and electric vehicles.”
The company also currently operates a service center in Milford.
The state automotive association has also protested Tesla”™s pending showroom presence in Greenwich and contends the legislation would hurt the state”™s 270 independent auto dealers.
“They vote, pay taxes, live locally and support local charities,” according to a statement by the association. “Tesla does not manufacture here; they would sell online instead of paying property taxes locally, and they prefer to outsource their repair work rather than have a dealership repair shop. Essentially they want a system that will have no economic commitment locally. If Tesla is having trouble selling it is because it”™s not priced for the average person at $100,000 with all the bells and whistles.”
It seems to me that an argument that Tesla will be taking away jobs, etc. at a $100K price point is spurious at best. In fact, if they open their own showroom, they have a physical presence, and hence have sales tax obligations. Showroom means people/jobs. The ONLY thing different is they don’t have a franchise sales model. One should question the wisdom of a state mandating to any companies that the only way they can sell their products is through franchisees. Rather than creating an exclusion to the existing law, how about repealing the existing law and letting business find the most efficient way to sell their products. Antiquated business models should not be enshrined in state law,