Tesla Dodges A Legislative Bullet

Derek Kreindler
by Derek Kreindler

A proposed law that would have eliminated Tesla’s ability to sell cars in New York state has died on the vine, after lawmakers adjourned their legislative session without taking any action on the bill.

The bills, introduced in both the lower house and state Senate, would make it illegal for an auto maker to operate a dealership in the state, and any current licenses would be ineligible for renewal, save for those issues prior to July 1, 2006, which would be grandfathered in. Tesla has faced various legislative battles in Virginia, North Carolina, Texas, Massachusetts, and Minnesota and has so far succeeded only in Minnesota.

Tesla would have had to close their three stores and two service centers in New York if the bill passed. Lee Zeldin, a Long Island Republican who sponsored the bill in the upper house, reportedly proposed a separate measure to make an exception for Tesla, echoing a “compromise” from Mark Scheinberg, the head of the Greater New York Auto Dealers Association. Scheinberg told Automotive News that he had offered to extend the grandfathering date, but Tesla refused. Even so, he denied trying to put them out of business, since, after all, Tesla could still establish a franchised dealer network.

According to AN, Tesla denied ever receiving the compromise – and even if they had, they would have rejected it.

Derek Kreindler
Derek Kreindler

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  • OneAlpha OneAlpha on Jun 24, 2013

    Since we constantly hear from the dealers and their representative trade organizations about how direct sales is a terrible idea that'll hurt the customers, let's run a test to find out. Actually allow a car company to sell directly to customers, over the internet or whatever, and measure the results. If it's a bad idea, let's find out how bad. If it's a good idea, let's find out how good.

    • David Dennis David Dennis on Jun 24, 2013

      Well, Tesla has done it, and as far as I can tell, customers are pretty happy with the experience. Maybe that's why dealers are scared. After all, the reputation of the auto dealership industry has never been the best ... D

  • Felix Hoenikker Felix Hoenikker on Jun 24, 2013

    State legislators are hopeless pawns of special interest groups with contributions to make. The dealer groups will lobby this to the bitter end. I'm suprised that the NY legislators let this die in committee. While Tesla will not be a direct threat for a long time if ever, the dealers probably see Tesla as the tip of the iceberg. If Tesla succeeds with their direct sales model, other manufacturers will spring up and start a prolonged attack on the franchised dealers model. Perhaps a GM joint venture in China exporting to the US as a new brand. I see Tesla's hope in getting their case before the US Supreme court where I predict that the whole dealer fanchise house of cards will crumble. In the mean time,let the games begin!

    • See 1 previous
    • Wumpus Wumpus on Jun 24, 2013

      @LoneWolffe I've always felt that attempts to take power from the federal government and move it to states implied that bribery costs were less than 1/50th at the state level. Plenty of Americans have no idea who their congresscum are or how they voted, but when was the last time you saw a state legislator in the news (unless arrested or on "stupid things politicians say" webpages).

  • Stuki Stuki on Jun 24, 2013

    Nice! That's one of the beauties of the Tesla business model: They focus their appeal on exactly the kind of progressive rabble that would surely have gone through with the ban, had the direct entrant been an Chinese econobox or pickup truck maker. It's not entirely dissimilar to how Chinese "child labor" is much more acceptable when the "creative" guys at Apple are the ones employing it... Good for Tesla. And New York. And, in due course, perhaps even America.

  • I figured something musta happened... I got a courtesy call from Tesla around 5PM today.

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