Motoramic

Auto dealers push law blocking Tesla sales in North Carolina

Justin Hyde
Motoramic

Tesla Motors has become the belle of Wall Street over the past week after revealing its first quarterly profit and receiving the top score ever from Consumer Reports for the Tesla Model S electric luxury sedan. But those accomplishments haven't played well yet in North Carolina, where the state Senate unanimously passed a bill Monday night that would block Tesla's plan for selling its cars directly to consumers — forcing it to either steer clear of the entire state or use a franchised auto dealer like all other automakers.

The Republican-sponsored bill, which has the backing of the North Carolina Auto Dealers Association, mirrors fights in several other states by dealers who worry about the precedent set by Tesla — even though Tesla's own projected output of 20,000 vehicles a year is a rounding error on the 15 million new vehicles sold by U.S. dealers annually. Dealers in New York and Massachusetts have gone to court in attempts to block Tesla; in Texas, the automaker has been pushing its own bill that would loosen restrictions which limit its sales pitches to phone conversations.

Dealers contend automakers, especially a start-up like Tesla, aren't inclined to handle warranty repairs, service and other tasks that customers need close to home. For its part, Tesla has been lobbying North Carolina lawmakers for an exemption by arguing that blocking the company's plans hurts the state economy; it says it has sold nearly 100 Model S cars to state residents with deposits for 60 more, and plans more service centers beyond the one opened in Raleigh.

What's noteworthy about the North Carolina bill is that in addition to stopping Tesla, it would force minor changes on the agreements dealers have with established automakers — including an odd proposal barring automakers from ordering dealers to remove sports memorabilia from their stores. (This may have something to do with NASCAR owners who run one model of car on Sundays but sell a variety of them through their name-brand dealership every other day of the week.) Automakers and dealers have fought for years in statehouses over who controls what, and in general, the dealers have held the upper hand. For Tesla, it's just another sign that Silicon Valley's only automaker has joined the major leagues.

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