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.”

 

[JB_13]

Sorry..didn't mean to post yet! Please see below:

Thanks so much for getting back to me quickly! I guess 11(E) could work, now that you point it out. 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" in (11)(E)(i): 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, "franchisee that owned and operated at least two dealerships" in (11)(E)(ii): I didn't think this applied to Tesla because I didn't think that Tesla's stores and/or galleries were operated on a franchisee basis. Do you know about this and would you mind explaining? Much appreciated!!

 

[RobStark]

Sorry..didn't mean to post yet! Please see below:

Thanks so much for getting back to me quickly! I guess 11(E) could work, now that you point it out. 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" in (11)(E)(i): 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, "franchisee that owned and operated at least two dealerships" in (11)(E)(ii): I didn't think this applied to Tesla because I didn't think that Tesla's stores and/or galleries were operated on a franchisee basis. Do you know about this and would you mind explaining? Much appreciated!!

"single line-make" is brand like Lexus not a model like Lexus ES300.

Since Tesla operates in Oregon, an administrative Judge must have ruled that all clauses that specifically apply to the relationship between a franchisee and franchisor do not apply to Tesla. In other States dealers have appealed Tesla licenses, that they do not fulfill all the obligations on all the clauses, on this basis sometimes successfully and sometimes not.

 

[JB_13]

Interesting...I will try to look this up. Thanks again, and I may be back regarding other states!!

 

[JB_13]

"single line-make" is brand like Lexus not a model like Lexus ES300.

Since Tesla operates in Oregon, an administrative Judge must have ruled that all clauses that specifically apply to the relationship between a franchisee and franchisor do not apply to Tesla. In other States dealers have appealed Tesla licenses, that they do not fulfill all the obligations on all the clauses, on this basis sometimes successfully and sometimes not.

Huh. I tried searching on Westlaw, Leagle, and State of Oregon: Compliance and the Law - Hearing Decisions (and the pages on there), and I wasn't able to find anything. I tried a few google searches as well, and nothing. Clearly you must be right since Tesla has operated in Oregon since 2012, but it's odd that I can't find anything.

Would you happen to be able to name a few examples of states that have exempted Tesla from certain direct sales exception provisions such as that Oregon one? Maybe I'm just searching wrong...

 

[Pluto]

Huh. I tried searching on Westlaw, Leagle, and State of Oregon: Compliance and the Law - Hearing Decisions (and the pages on there), and I wasn't able to find anything. I tried a few google searches as well, and nothing. Clearly you must be right since Tesla has operated in Oregon since 2012, but it's odd that I can't find anything.

Would you happen to be able to name a few examples of states that have exempted Tesla from certain direct sales exception provisions such as that Oregon one? Maybe I'm just searching wrong...

It's probably a combination of the Oregon DMV being more lenient and Tesla franchising themselves. This has happened in Missouri: State of Missouri ex rel. Missouri Automobile Dealers Association, et al vs. Missouri Department of Revenue and its Director and Tesla Motors
Missouri has a similar law that states that vehicles cannot be sold except through a licensed franchisee and a franchisor cannot own/operate a new motor vehicle dealership: 2017 Missouri Revised Statutes :: Title XXVI TRADE AND COMMERCE :: Chapter 407 Merchandising Practices :: Section 407.826 New motor vehicle dealership, restrictions on operation of or ownership by a franchisor.
It definitely makes investigating/providing explanations pretty complicated and it's mostly because these laws have been modified repeatedly to make things more/less restrictive for manufacturers for very specific reasons.

I updated the original post/image btw, thanks for keeping the thread updated!

 

[JB_13]

It's probably a combination of the Oregon DMV being more lenient and Tesla franchising themselves. This has happened in Missouri: State of Missouri ex rel. Missouri Automobile Dealers Association, et al vs. Missouri Department of Revenue and its Director and Tesla Motors
Missouri has a similar law that states that vehicles cannot be sold except through a licensed franchisee and a franchisor cannot own/operate a new motor vehicle dealership: 2017 Missouri Revised Statutes :: Title XXVI TRADE AND COMMERCE :: Chapter 407 Merchandising Practices :: Section 407.826 New motor vehicle dealership, restrictions on operation of or ownership by a franchisor.
It definitely makes investigating/providing explanations pretty complicated and it's mostly because these laws have been modified repeatedly to make things more/less restrictive for manufacturers for very specific reasons.

I updated the original post/image btw, thanks for keeping the thread updated!

Ah, yes, I DID see the Missouri ruling, which is why I started questioning why I couldn't find anything on Oregon. In connection with my research though (and I don't even know if anyone is interested in this but just putting it out there), I found something similar with Hawaii:

Apparently Hawaii's laws actually prohibit direct sales outside the franchise model, but Tesla has somehow managed to get around that. I know Tesla has obtained a manufacturer's license, motor vehicle dealer's license, repair dealer's license, and two motor vehicle branch location licenses...so perhaps Tesla somehow worked around the prohibition using these licenses? I couldn't find any administrative ruling saying otherwise, so it's a bit of an open question.

 

[Pluto]

Made some big updates to completing all available information (including having legal references for all fifty states). I added some recent updates of bills that failed to pass as referenced by this Electrek article. I also added an indicator for states that have a direct sales exemption for non-fossil fuel automakers.

 

[Tam]

Brand new 2018 map from Yahoo.

 

[RobStark]

Isn't the Michigan dot a single Model X inside a Nordstrom with sign displaying "tesla.com" and nothing else?

 

[Tam]

Isn't the Michigan dot a single Model X inside a Nordstrom with sign displaying "tesla.com" and nothing else?

According to Detroit News, there were about 400 Tesla cars registered in Michigan in 2016.

After 2 years, there's still no service center in Michigan. May be because of slow sale growth?

 

[RobStark]

After 2 years, there's still no service center in Michigan. May be because of slow sale growth?

Because it is explicitly prohibited by Michigan law.

OEMs can not operate their own service centers.

 

[Pluto]

Brand new 2018 map from Yahoo.

So cool, they referenced this thread!! I'm glad I could help contribute to getting the word out there about what's happening with these dealership laws. And glad that my work made it into a Yahoo article

 

[raincityjerry]

The map has no credibility with Washington shown as a NO TESLA state. I have bought 3 in Seattle and all are serviced there. Such a blatant error!

 

[Tam]

error!

Would you please clarify what color and shape you see on the latest 2018 map from Yahoo above?

Washington state is blue which means good for Tesla sales and it has one red dot at Seatle, WA which means it has at least a store or more to take your order.

Grey states like Michigan means no sales. It has a black dot which means it is not a store to take orders but it's a gallery for non-sales purposes such as education without quoting prices.

 

[Pluto]

The map has no credibility with Washington shown as a NO TESLA state. I have bought 3 in Seattle and all are serviced there. Such a blatant error!

Do you mean in this thread's map? Automakers aren't allowed to direct sell or service vehicles, but Tesla has an exemption and can do both (notice the blue Tesla logo inside of Washington's borders). There was a bill passed in Washington in 2014 that effectively outlawed any automaker from selling or servicing vehicles themselves unless they already had a location open at that time. Here's the relevant piece of law:

(1) Notwithstanding the terms of a franchise agreement, a manufacturer, distributor, factory branch, or factory representative, or an agent, officer, parent company, wholly or partially owned subsidiary, affiliated entity, or other person controlled by or under common control with a manufacturer, distributor, factory branch, or factory representative, shall not:
(g) Compete with a new motor vehicle dealer of any make or line by acting in the capacity of a new motor vehicle dealer, or by owning, operating, or controlling, whether directly or indirectly, a motor vehicle dealership in this state. It is not, however, a violation of this subsection for:
(vii) A manufacturer that held a vehicle dealer license in this state on January 1, 2014, to own, operate, or control a new motor vehicle dealership that sells new vehicles that are only of that manufacturer's makes or lines and that are not sold new by a licensed independent franchise dealer, or to own, operate, or control or contract with companies that provide finance, leasing, or service for vehicles that are of that manufacturer's makes or lines.

Please let me know if anything ever is out of date or about other car makers that directly operate their own customer-facing locations. Obviously I've looked over Tesla's locations and those states I'm confident have the correct data, but some states don't quite address direct sales in their legislation.

 

[Pluto]

CleanTechnica referenced the map image and this thread: Absurd Tesla Obstructionism In Numerous US States | CleanTechnica

 

[RobStark]

Tesla is gearing up for a fight in Texas, again.

 

[Pluto]

Not all states have put their 2019 session bills online yet, but Texas has (at least for many of the bills) and I haven't found anything to do with direct sales yet: Texas Legislature Online - Text Search
I also checked numerous other states and haven't found anything yet. I could be using the wrong keywords to search but with my experience I don't think it's likely. Some states don't seem to publish prefiled bills (only introduced bills) so that may be why. See here for updates on each state's bills going online: 2019 session planning · Issue #2681 · openstates/openstates
And here to make it easy to find online legislation websites for each state: openstates/openstates

 

[RobStark]

A new New Mexico "Tesla Bill."

'Tesla Bill' offers New Mexico motorists new choice

 

[Pluto]

A new New Mexico "Tesla Bill."

'Tesla Bill' offers New Mexico motorists new choice

Thanks! I just went through all the states where Tesla has restrictions and the following bills were introduced:

• Connecticut - HB 5285
• Nebraska - LB 51
• New Mexico - SB 243
• Oklahoma - SB 790
• South Carolina - S 379
• West Virginia - HB 2219

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. Let me know if I missed anything though!