Wiki New Bills Introduced to End Bans on Tesla’s Direct-Sales Model

As new legislative sessions begin to ramp up in states across the country, Tesla is pushing to make its direct-sales business model legal in states it’s still restricted.

There are seven states that currently ban Tesla’s business model or restrict its number of stores and service centers that could soon change their laws.

TMC Member Pluto went through all the states where Tesla has restrictions and the and found the following bills introduced:



Connecticut – HB 5285

Nebraska – LB 51

New Mexico – SB 243

Oklahoma – SB 790

South Carolina – S 379

West Virginia – HB 2219



Pluto noted: “Many states seemed to not have started their legislative sessions or introduced all their bills yet so I’ll have to check for more later. Interestingly, Texas appears to be almost done introducing bills and I found nothing there.”

 

[Pluto]

Hi guys,

I want to avoid a Tesla-specific map because I believe other automakers will eventually direct sell to consumers (possibly new automakers) and then this map would be questionable in that context. Instead, I'd like to make the map more clear. I absolutely appreciate the feedback though and would like to hear your opinions on the same topic about this version:

View media item 117736

Tesla does not operate stores freely in Arizona. They got a judge to allow the Scottsdale location a few years ago and followed that up with a second store in Tempe two years ago. But they got pushback so they closed the Tempe store last year (it is still a service location) and opened a second store in Scottsdale.

I'm planning on calling the service center just in case, but from what I found it was due to corporate reasons that they moved their sales center. This article directly specifies Arizona and coincides with the timing of what you saw: Tesla is restructuring some store/service locations to focus on delivery and service

 

[Gwgan]

Maine has no prohibition preventing Tesla from opening a store. There is just no market to attract their interest yet. Boston area stores say NH is next in the region.

 

[Tam]

...will...

I think what counts is present tense, not sometime in future that Tesla will be able to sell in Utah after its supreme court ruled against Tesla.

...automakers will eventually direct sell...

Anti-direct sell is necessary to protect existing dealerships from their own car companies as in current California law so I don't think that will be repealed.

Imagine GM would have a Bolt's MSRP at $36,620 and it sells to its dealers for $35,000 so their dealer can make a profit of $1,620. However, if GM can direct sell at a lower price at $34,000, dealerships will be out of business!

That means GM, one among many other automakers, can never be able to direct sell even in California.

Thus, the legend of blue states with "Automakers can direct sell" is false.

It should be "Automakers with no existing dealerships can direct sell".

 

[Tam]

Colorado only allows Tesla sales in one single location since the opening in 2011.

Tesla can have other stores but they cannot conduct sales in those other stores.

For this Tesla thread discussion, it is a direct sales state because Tesla is grandfathered.

However, for Automakers in general, it is not a direct sales state because only Tesla got the exemption.

 

[TexasEV]

In other countries there are both manufacturer owned sales locations and franchised dealers, and it works out just fine. Your example doesnt make economic sense on how a car would be priced. Regardless, this should be a matter of the contractural relationship between manufacturer and its franchised dealers, not something the state should be involved in. Just as it is for every other manufactured item.

 

[ItsNotAboutTheMoney]

Maine has no prohibition preventing Tesla from opening a store. There is just no market to attract their interest yet. Boston area stores say NH is next in the region.

I'm not sure of the exact law in NH. I know they can do direct sales, but articles about the 2015 change in law refer to a difference depending on "having a retail presence". So, Tesla might be able to have service centers only, or service center and galleries in NH.

Obviously, I'd like them to have something closer.

 

[Pluto]

I'm planning on calling the service center just in case, but from what I found it was due to corporate reasons that they moved their sales center. This article directly specifies Arizona and coincides with the timing of what you saw: Tesla is restructuring some store/service locations to focus on delivery and service

I called (Scottsdale) and they verified this. They said it was because of less local interest/foot traffic at Tempe that they moved to Scottsdale.

Colorado only allows Tesla sales in one single location since the opening in 2011.

Tesla can have other stores but they cannot conduct sales in those other stores.

For this Tesla thread discussion, it is a direct sales state because Tesla is grandfathered.

However, for Automakers in general, it is not a direct sales state because only Tesla got the exemption.

I called the Littleton, CO location and they said they do sales. I'll also double check what the law says when I do start finding sources for each of the blue states.

In other countries there are both manufacturer owned sales locations and franchised dealers, and it works out just fine. Your example doesnt make economic sense on how a car would be priced. Regardless, this should be a matter of the contractural relationship between manufacturer and its franchised dealers, not something the state should be involved in. Just as it is for every other manufactured item.

Another thing to add is that while traditional automakers may not operate their own stores for some time, there are so many new EV companies popping up that at least a couple of them are bound to succeed. I believe most new entrants to the car market are going to rely on the direct sales model to sell their vehicles. Just as Tesla has been saying, dealerships don't want to sell electric cars. For instance after the Smart brand announced it was moving to produce EVs only, 2/3 of Mercedes Benz dealerships shut down their Smart sales channels.

 

[RobStark]

Tesla was grandfathered in Nevada when they made the Gigafactory deal.

They allowed car companies without dealers to establish stores within ~6 months of passing the law then prohibited companies from establishing stores from then on. Almost the same law as Washington.

Washington DC has no franchised dealers,no franchised dealer association, and therefore no franchise laws. Tesla opened a store in DC, I heard they got their licence in 15 minutes.

BTW Kind of ironic that there is no store in Reno/Sparks Metro Area.

 

[hacer]

So temporary slavery is ok in NM?

Well slavery has been back ever since SCOTUS ruled that corporations are people!

 

[Ludus]

From Michigan although the legal situation hasn’t changed and the federal lawsuit continues I see a surprising number of Teslas in the northern suburbs, Tesla now has Store/Gallery in the upscale Somerset Mall,has a lot of Superchargers and is opening a service center.

 

[Pluto]

Hey guys, an update. I've been working with the moderators to allow me to edit/update the first post and they've made it a WikiPost to enable this. Unfortunately I still don't see an edit button there (even though I see one on other WikiPosts) and am waiting on further assistance. In the meantime, I've been working on researching laws state-by-state for each of the white states and so here's the latest version of the map:
View media item 117877Legal Sources:

• Alabama - Automakers cannot direct sell
• Alaska - Automakers can direct sell *
• Hawaii - Automakers can direct sell
• Idaho - Automakers can direct sell *
• Iowa - Automakers cannot direct sell
• Kentucky - Automakers cannot direct sell
• Michigan - Automakers cannot direct sell or service
• Mississippi - Automakers can direct sell
• Nevada - Automakers besides Tesla cannot direct sell
• New Mexico - Automakers cannot direct sell or service
• South Carolina - Automakers cannot direct sell or service
• Texas - Automakers cannot direct sell
• Vermont - Automakers can direct sell
• West Virginia - Automakers cannot direct sell

* Further verified by calling the state's DMV or DOT since there were no legal statutes allowing or preventing automakers to sell directly to customers.

Tesla was grandfathered in Nevada when they made the Gigafactory deal.

They allowed car companies without dealers to establish stores within ~6 months of passing the law then prohibited companies from establishing stores from then on. Almost the same law as Washington.

Washington DC has no franchised dealers,no franchised dealer association, and therefore no franchise laws. Tesla opened a store in DC, I heard they got their licence in 15 minutes.

BTW Kind of ironic that there is no store in Reno/Sparks Metro Area.

Good eye!

 

[RobStark]

Oklahoma and Louisiana passed laws in the last couple of years patterned on the Texas law.

 

[Tam]

Nebraska prohibits Tesla direct sales but Legislative Bill 830 is being introduced to bypass an existing law.

 

[RobStark]

Tesla on track to sell new cars in Utah after bill passes

 

[RobStark]

"HB369 to permit Tesla to own and operate car dealerships in the Beehive State — something that has been barred under state law that prohibits automakers from having a direct ownership interest in any new-car dealership.The governor’s office said he saw HB369 as providing “a sensible way to modernize auto sales in Utah.”

Gov. Herbert signs another 44 bills, including a $1.7M fee break for EnergySolutions

It is official now. Need a blue Tesla "T" inside Utah now.

 

[Pluto]

Somehow I missed the updates for this thread even though I checked for notifications... I'll just have to continuously look at the end of this thread. I'll update the thread over the next day or so, thanks for posting updates here!

 

[moerderin]

Time to update Utah?

http://universe.byu.edu/2018/04/19/tesla-enters-utah-market-as-more-drivers-switch-to-electric/

 

[JB_13]

Hi! New here, and this is a great resource--I'm doing a bit of research on direct sales myself, and would really appreciate some help regarding Oregon.

1) Can anyone shed light on the Oregon statute that allows Tesla to direct sell there? I've read it multiple times and just can't figure out how it works, because it seems to me like it doesn't allow direct sales other than a few exceptions, but not for OEMs like Tesla (even for pure direct sales). Which exception does Tesla fit under? The only way I could think of was Section (11)(a)(iii) - sale to a "qualified independent person at a fair and reasonable price", but this seems so arbitrary...

2) So Tesla is allowed to direct sell, but does the law allow other OEMs (or just EV manufacturers, like some other states)? If it is the section I identified, then it seems like any OEM can direct sell there, even ones who have dealership franchises. Is that right...because that also seems highly unlikely given the whole reason for dealer franchise laws.

This is the same statute I found by myself, but saw that it was listed here as the one allowing Tesla sales:
https://law.justia.com/codes/oregon/2015/volume-14/chapter-650/section-650.130/
OR Rev Stat § 650.130 (2015)

Just can't wrap my head around how it allows direct sales. Thanks in advance!!

 

[RobStark]

It looks like it is section 11 E i that says a manufacture may have up to 4 single line dealers in the State. Some exclusions from other areas of the statue include OEM dealers may not be within 15 miles of a franchise dealership nor within the defined geographic marketing area by agreement between manufacture and franchisee.

My guess is that excludes Portland, Salem and Eugene plus a few other of the larger towns in Oregon for every large OEM. In other words no OEM would want to put a dealership in any allowed area.

Tesla has two locations in Oregon both in Portland. Can't imagine them wanting more than 4.

 

[JB_13]

It looks like it is section 11 E i that says a manufacture may have up to 4 single line dealers in the State. Some exclusions from other areas of the statue include OEM dealers may not be within 15 miles of a franchise dealership nor within the defined geographic marketing area by agreement between manufacture and franchisee.

My guess is that excludes Portland, Salem and Eugene plus a few other of the larger towns in Oregon for every large OEM. In other words no OEM would want to put a dealership in any allowed area.

Tesla has two locations in Oregon both in Portland. Can't imagine them wanting more than 4.

Thanks so much for getting back to me quickly! I guess 11(E) could work. I'm just not familiar with a lot of the language, so I had a couple of questions about each exception and that contributed to me not being able to figure out which one applied.
For example, "single line-make": I've seen that language in other states' legislation - can you clarify exactly what that means? Does that mean a single model, like Tesla's Model X, or just a single brand, like for Toyota as a parent company, only Lexus brand cars (I'm thinking the latter makes more sense)? Also, do you know how Tesla stores and galleries work?