Ohio, other states, take aim at Tesla

Staff and wire reports Published:

States, including Ohio, are taking aim at Tesla Motors business model.

The Columbus Dispatch reported last week that Tesla and the Ohio Automobile Dealers Association are talking to each other, as lawmakers seek a compromise in a debate about whether the state should ban Tesla's manufacturer-owned stores, a law the dealers association wants.

An Ohio Senate panel is reviewing bill -- introduced in December in response to dealers' concerns -- that says that an auto manufacturer cannot own a dealership, the newspaper reports. Auto dealers say that Tesla's model undermines a system in which major brands, such as Ford and Toyota, are sold by dealers independent of their manufacturers.

In New Jersey, motor vehicle officials have approved a new regulation that would require all new car dealers to obtain a franchise agreement in order to receive a state license.

The regulation adopted last week by the state's Motor Vehicle Commission effectively prohibits companies from using a direct sales model, which cuts out the middleman and brings vehicles directly to customers through smaller retail establishments. The MVC's board adopted the regulation by a 6-0 vote, and it will take effect April 1.

Critics say the regulation will hamper the electric car industry's attempts to expand its presence in New Jersey. The regulation was supported by the New Jersey Coalition of Automotive Retailers (NJCAR), which has noted that state law has long required automakers to sell their vehicles through dealers.

California-based Tesla, one of the electric car firms that would be affected by the new rule, called it "an affront to the very concept of a free market," in a statement posted on its corporate website.

Tesla said it has been "working constructively" with the MVC and Gov. Chris Christie's administration since last year to delay the proposal, so it could be handled through "a fair process" in the state Legislature. The company said the MVC and the administration went "beyond their authority to implement the state's laws at the behest of a special interest group looking to protect its monopoly at the expense of New Jersey consumers."

Administration officials disputed Tesla's claims.

"Since Tesla first began operating in New Jersey one year ago, it was made clear that the company would need to engage the Legislature on a bill to establish their new direct-sales operations under New Jersey law," spokesman Kevin Roberts said in a statement issued Tuesday afternoon. "This administration does not find it appropriate to unilaterally change the way cars are sold in New Jersey without legislation and Tesla has been aware of this position since the beginning."

Tesla currently has two retail locations in New Jersey and has planned to expand here in an effort to sell its electric cars, which retail for around $60,000 before any incentives.

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  • Interesting....when you purchase a new car, who is the seller on the title? The dealership or the car manufacturer? Who owns the dealers inventory?