auto dealers in New York late Friday night. State legislators
failed to act on two bills that would have prohibited the state
from registering any vehicle not bought through a dealer and forced
Tesla to close its stores in the state. The bills are dead until
the assembly reconvenes in January.
The electric carmaker prefers to sell its vehicles directly to
the public rather than through auto dealers—much to the chagrin of
the dealers, who also went to the courts to try and derail Tesla.
But, in April, a state trial court found that the New York dealers
had failed to prove injury from Tesla’s direct-to-consumer
The New York bills would make it illegal for vehicleOf course, the claim that the dealers just want Tesla to follow
manufacturers or related entities to operate a dealership. Licenses
for any existing dealership under manufacturer control would be
ineligible for renewal unless the original license was issued prior
to July 1, 2006.
Tesla has three stores and two service centers in the state of
New York, all of which opened after 2006. All would have to close
if the bills passed, a Tesla spokeswoman said.
Mark Schienberg, president of the Greater New York Automobile
Dealers Association, told Automotive News late Friday that
the state's dealer groups offered Tesla a compromise in recent
days: They would extend the grandfathering date in the legislation
to allow continued operation for Tesla's existing stores. Tesla
turned down the offer, Schienberg said.
But despite the earlier grandfathering date, "we're not putting
them out of business," Schienberg said.
Even if the bill passes, Tesla could still operate freely in New
York by setting up a franchised dealer network like other vehicle
manufacturers, he said.
But Musk has "just chosen that he'd rather not follow any of the
rules and regulations and standards that each state has, and that's
why there's a pushback right now," Schienberg said.
Diarmuid O'Connell, Tesla's vice president of business
development, told Automotive News later Friday that the
dealers' offer to extend the grandfathering date never made it to
him—the point man for Tesla on this issue. But even if it had,
O'Connell said he would have said no.
the rules is a little much; the dealers wrote the rules. Dealers
are powerful forces in statehouses across the country because
states get up 20 percent of their sales tax revenue from
dealers. And dealers employ as much as eight percent of the retail
workforce in some states.
So kudos to Tesla for taking them on.
If you missed Steve Chapman’s Reason piece on Tesla
last week, it’s certainly worth a read.