Tesla, Car Dealers Square Off
Posted to: Business, Consumer Protection, Corporate Watch, Courts, Energy, Environment, Jobs, Manufacturing, Greenwich, DMV, Manufacturing Sector, Retail Sector, Trade, Transportation, Utilities Sector
HARTFORD, CT — It’s the fourth year that Tesla, an American electric car maker, is asking the General Assembly for permission to sell its vehicles in Connecticut.
What’s different this year?
Tesla’s Model 3, with a sticker price that starts at $35,000, is now available to the public.
Will Nicholas, Tesla’s senior manager of policy and business development, said they’re opening on average about one store per week around the world to address demand.
“Tesla has a business model that’s specifically designed to educate people on the benefits of electric vehicles as well as sustainable energy,” Nicholas said.
Currently, Connecticut residents who wish to purchase a Tesla have to pick up their vehicle from stores in New York or Massachusetts. Rhode Island recently allowed Tesla to open a store in Warwick without the need for legislative approval.
Jim Fleming, president of the Connecticut Automotive Retailers Association (CARA), said Tesla would be welcomed in Connecticut if they would agree to use franchise dealerships to sell their cars.
“All the jobs that are at the dealership should stay at the dealership,” Fleming said.
Kathryn Wayland, a sixth-generation Subaru franchise owner in Lyme, said Tesla is trying to “skirt a law that’s been in existence that actually protects the consumer.” She said they’re trying to become the “next Apple, where there is no consumer protection or competition.”
In addition to providing consumer protections, Wayland said her dealership also gives back to the community by supporting local little league teams.
“When was the last time you saw somewhere local supported by Tesla or by Amazon? Those big giants don’t support your local little league team. They don’t support your local community.” Wayland said.
There are more than 270 new car dealerships in Connecticut that employ 14,397 residents, according to CARA.
Fleming said there are 44 types of electric vehicles being sold by Connecticut franchise dealerships.
There are 1,600 Teslas registered in Connecticut and 3,000 orders have been placed by Connecticut residents for the Model 3.
The battle between Tesla and the car dealers is based on the company’s business model, and whether a new company like Tesla should have to adhere to the rules of a franchise dealership.
Jonathan Chang, vice president of legal affairs for Tesla, testified that they have opened stores in 24 states without using franchise dealerships.
“It’s an important part of our message to sell direct,” Chang said.
He said electric vehicles are still about 1 percent of the market.
The dealers and Tesla have been unable to reach an agreement to co-exist.
Tesla does have a non-sale Greenwich Gallery, which employs about 8 people who are able to provide consumers with information about the vehicles. They are unable to sell the vehicles or allow consumers to test drive the vehicles.
Last year, the Department of Motor Vehicles found that what Tesla is doing at its Greenwich gallery is “not substantially different than business activities conducted by licensed new car dealers.”
The decision also said that “but for the fact that a prospective Tesla purchaser must employ his or her personal computer to place an order for a vehicle with Tesla, the purchase process is identical to the business practice of a licensed dealer in the state of Connecticut.”
Tesla moved for reconsideration of the decision and was given a stay, which allows them to keep operating their Greenwich location.
“There is litigation pending,” Fleming said Monday. “We filed briefs today in Superior Court in New Britain.”
He said in his experience the General Assembly waits for the court to make a decision.
Tesla is seeking to have the DMV’s action dismissed.