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After The New Jersey Ban, Here's Where Tesla Can (And Cannot) Sell Its Cars

Mar 15 2014, 10:36am CDT | by

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After The New Jersey Ban, Here's Where Tesla Can (And Cannot) Sell Its Cars

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After The New Jersey Ban, Here's Where Tesla Can (And Cannot) Sell Its Cars

With New Jersey taking action to ban Tesla from selling its cars there, the Garden State has joined with Arizona, Texas, Virginia and Maryland in making law only an auto-dealers association could love. Tesla has a presence in those states, but its “stores” are really nothing of the sort. They are instead “galleries” where its representatives are not salespeople and cannot tell you what the car costs, nor can they actually help you purchase one. Instead, thanks to the free-flowing capitalism of Republican governors like Jan Brewer of Arizona, Rick Perry of Texas and Bob McDonnell of Virginia, would-be Tesla customers get to look at the cars and then head home to buy them online. (So far, you can still do that everywhere.) Not that things are much better in Maryland, where Democrat Martin O’Malley runs things. There, you can at least take a test drive at a Tesla gallery. After that? Still no purchase allowed.

But Tesla’s troubles don’t end there. The crazy-quilt of restrictions proposed, in place, morphing and beaten back is shown on the map. And they break down as follows:

Limits on what Tesla can do

Georgia: The company can only sell 150 cars a year there, under an “exemption” from state auto-dealer regulations. A pending bill would increase that to 1500 per year, but would eliminate Georgia’s generous $5,000 electric-vehicle rebate.

Colorado: Tesla has one store, outside of Denver at the Park Meadows shopping center in the suburb of Lone Tree. It’s aptly named as under a law passed subsequent to the store’s opening, Tesla cannot open any more in Colorado.

If at first you don’t restrain trade…

Ohio: Last December, state auto dealers tried to get legislators to sneak a Tesla ban through on an unrelated bill. They failed. The bill is back this year, in cleaner form. If passed, it will limit Tesla to the two dealerships it has in Ohio, making it akin to the Colorado situation.

New York: Auto dealers obtained a promise from aides to Governor Andrew Cuomo (more Democrats joining the fray!) that he’ll sign a Tesla ban working its way through the state legislature, assuming it passes.

So far, no ban

Massachusetts: Tesla won a lawsuit brought by auto dealers there challenging its license for a dealership in Natick, a Boston suburb. The dealers lacked standing under the law, according to the court.

Minnesota: A bill to stop Tesla died in the state legislature there. Auto dealers gave up the fight last March, though they suggested they could start fighting again someday.

North Carolina: In June, a similar bill to Minnesota’s died in North Carolina’s statehouses.


Overall, that makes 5 states with bans on selling, 2 with significant restrictions, 2 with pending legislation. The population of those states is 57 million (bans), 15 million (restrictions), 31 million (pending). If Ohio and New York go through with their rules, Tesla will have problems in 9 states representing more than 100 million people — close to 1/3 of the U.S. And there’s no reason to believe that dealers associations in other states won’t be emboldened by what happened in New Jersey. In fact, even victories for the company can prove short-lived, as Tesla’s win in the New York courts last year showed.

CEO Elon Musk told Automotive News in March of 2013 he didn’t want to keep fighting the states one by one and might consider a federal challenge: “If we’re seeing nonstop battles at the state level, rather than fight 20 different state battles, I’d rather fight one federal battle,” he said. It’s become clear that Tesla is going to be butting heads with the states for some time to come. Check back in this space soon as I take a deeper look at the company’s prospects if Mr. Musk goes to Washington.

Follow me on Twitter and on Facebook. Find the rest of my Forbes posts here.

Source: Forbes


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