Tesla: North Carolina Hustles to Keep Electric Cars Off the Market


In a move that would effectively ban the sell of Tesla motor vehicles in the state of North Carolina, state senators in the Senate Commerce Committee unanimously approved a measure which would prevent consumers from purchasing vehicles over the phone or internet. Ostensibly, the bill would protect the rights of consumers, but it seems only to do so by guaranteeing the monopoly of licensed car dealerships, who support the legislation.

The legislation's language does not target Tesla specifically, but would prevent car manufacturers from bypassing dealerships to sell directly to consumers. This strategy is at the heart of Tesla's business model, which seeks to sell luxury electric cars online or over the phone, then deliver them directly to the consumer without granting a dealership an opportunity to profit by acting as a middleman.

The legislation was introduced to the committee by Republican Senator Tom Apodaca, who received $8,000 in political donations last cycle from the North Carolina Automobile Dealers Association, the maximum allowed under state law. Even though the committee has voted to move the legislation to the floor, it will still need to be approved by the Senate, House, and governor before it can become law.

The move comes on the heels of Tesla's latest quarterly earnings report, which was the first one in which the company made a profit. Stock values have surged since the news was released, up a total of 174% year-to-date. Countrywide, Tesla's electric Model S actually outsold comparable luxury-class vehicles, including the Mercedes S-Class and the BMW 7 series, leading the pack by a strong 1,500 sales.

The lowest-level Model S sells for around $60,000, and can get about 200 miles on a single charge. Initially criticized as unaffordable, the mounting evidence suggests that the company is here to stay, and as Tesla's market expands, dealerships could find themselves cut out of a developing, and potentially lucrative, market. This could explain why for the 2012 elections, the North Carolina Automobile Dealership Association donated close to $115,000 to candidates on both sides of the aisle.

The dealership association has asserted that they'd have no problems with Tesla, if they'd agree to operate within the framework of a dealership. The group has defended its interests, arguing that dealerships are the customer's point of contact for malfunctions, information, and service, while manufacturers traditionally remain invisible. The dealership association has also argued that it makes significant contributions to the community, including jobs, and that protecting their interests are synonymous with protecting the interests of the community at large.

Until the bill is brought to a vote, its life is uncertain, but what's clear is that the North Carolina Automobile Dealership Association is pushing its interests not just to the public, but also to politicians' pocketbooks.