North Carolina Senate Passes Bill To Block Direct Tesla Sales
Last week the North Carolina General Assembly approved Senate Bill 327, and sent it to the Senate floor.
Now, as of Monday night, that bill has been passed by the Senate in a unanimous vote, and will be sent to the House of Representatives for a final vote. If enacted,that will mean no sales can happen without using a licensed dealer.
The bill, if unchanged, would see North Carolinians prohibited from purchasing the Model S electric sedan from Tesla by limiting how it can be sold, forcing Tesla to adapt a traditional private dealership model to sell in the state or leave entirely; Tesla is not keen on either option.
According to the legislation, original equipment makers can not “use a computer or other communications facilities, hardware, or equipment” to sell vehicles in the future, an important distinction in compared to even the battle currently waging in Texas, that only pertains to how employees at boutique showrooms can interact with potential customers.
The bill is backed by the North Carolina Auto Dealers Association, and sponsored by Sen. Tom Apodaca, (Republican from Henderson), who coincidentally also received $8,000 in campaign contribution from that same group.
Mr. Apodaca says the bill is to prevent “unfair competition.”
Robert Glaser, president of the North Carolina Automobile Dealers’ Association said of the bill:
“We believe that Tesla, like all the other auto dealers in the state, should get a license, appoint a dealer, fall under the protection of the Department of Motor Vehicles, and sell cars. We just want them to play by the same set of rules that the other 7,000 dealers in the state do.”
Glaser went on to explain all that is required of Tesla is to set up an agreement with a franchisee, that is also licensed and regulated by the DMV. That dealership would then be required to then have a showroom, but it can be as small as 96 square feet,
“It can be in a mall…I just don’t know why they don’t do it.”
Diarmuid O’Connell, Tesla Motors’ VP of business development, told ABC News that the bill was a “fundamentally protectionist effort to lock down the market and force us to sell through the middle man.”
O’Connell said that it was a “mismatch” for Tesla to sell through a dealer, who are primarily focused on selling gasoline vehicles.
“We’re not in the business of tearing down the dealer model. We simply believe that to successfully introduce this technology to the market, it needs to be done in a focused fashion, by us.”
Unlike in other states, this new legislation is the most rigorous, extending into cyberspace, as it prohibits Tesla from doing transactions or even interactions with customers online, a fact Mr. O’Connell is not happy about accepting as a reality.
“We are happy to play by the rules in North Carolina right now, but what (lawmakers) are doing is changing the goal posts…and in doing so, they are eliminating a fundamental right of North Carolina residents to transact a vehicle online in the privacy of their home.”
A DMV spokeswoman for North Carolina, Marge Howell, told ABC News “the bill will need to be sent to the state’s House of Representatives by Thursday, before it is put to a vote.” After which, Tesla would then be open to challenging it on grounds it violated the commerce clause.
So far in 2013, 49 Tesla Model S sedans have been registered in North Carolina, bringing their total to date to more than 80, with another 60 orders pending in the California automaker’s system.
Perhaps in anticipation of this fight (and it not going so well), Tesla has no boutique/dealer stores in North Carolina, but does operate a service center out of Raleigh.