New York Auto Dealers Try To Make Registering Tesla Stores Illegal: BREAKING

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Tesla owners & supporters gather in Statehouse in Austin to support company [photo: John Griswell]

Tesla owners & supporters gather in Statehouse in Austin to support company [photo: John Griswell]

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Well, this is a new tactic we haven't seen before in the fight between franchised auto dealers and Tesla Motors, the Silicon Valley electric-car startup.

A pair of bills in the New York State Legislature, backed by New York state auto dealers, would make it illegal to license or renew licenses for Tesla stores within the state.

The bills, submitted now pending in the last days before the Legislature adjourns for the summer, would make it impossible for any state resident to buy a vehicle not sold by an independently-owned third party.

Which is to say, a car dealer.

UPDATE: As Bloomberg reported late Friday night, the bill was set aside in the New York State Assembly, which will not reconvene until January. It adjourned its session without acting on the measure.

UPDATE: At 3:17 pm on Friday, Tesla CEO Elon Musk tweeted, "NY Assembly passing bill to shut down Tesla, but Senate holding the line. Appreciate senators resisting influence of auto dealer lobby."

Only one qualifies

The only manufacturer that now sells cars directly to consumers, rather than through franchised dealers, is Tesla Motors [NSDQ:TSLA].

Rather than selling to dealers, who then sell to consumers, the company operates Tesla Stores--showrooms, essentially--where customers can ask questions and take test drives before buying their car online from Tesla itself at a set price.

The bills--A07844 in the Assembly and S05725--amend the state's vehicle and traffic law, "in relation to automobile manufacturers and unfair practices by franchisors."

And it prohibits the state from issuing or renewing the registration of any car dealer in which a carmaker holds a controlling interest--unless that certificate was issued before July 1, 2006.

In other words, the bill has been narrowly crafted to prohibit renewal only of Tesla's stores. The bill does appear to allow temporary registration of such stores for no longer than one year.

UPDATE: As well as forbidding the state to renew licenses of existing Tesla sites, the bill also makes it illegal to license any future store or dealership owned by a manufacturer.

That goes beyond similar efforts, such as the March 2010 bill in Colorado that prohibited future Tesla-owned sites--but did not seek to shut down the state's pre-existing Tesla Store.

It also appears to make it illegal for the state to register new Tesla vehicles not sold by franchised dealers--which, of course, Tesla doesn't have.

Sample letters

A sample letter available on the New York State Automobile Dealers Association website notes that the identical bills are "consensus" bills.

They have been, it says, "agreed upon by the Alliance of Automotive Manufacturers, the Global Alliance of Manufacturers, and all of the New York State Dealer Associations."

The letter--to be sent to senators or assemblymembers--urges the elected officials to cosponsor the bill in their house.

It says the bills "clarifies existing provisions of the franchise law to ensure fair dealings between dealers and franchisors."

They will also "level the playing field and help franchised dealers improve on those sales and job numbers in New York."

Finally, the bills "will also update the Act to address new circumstances."

NYSADA's website also has a downloadable copy of what appears to be an earlier markup of the bill text.

Stealth bills

The stealth nature of the bills may be demonstrated by the fact that neither bill is listed on the NYSADA "Legislative Efforts" page as bills it supports (or, for that matter, opposes).

Early this afternoon, Tesla CEO Elon Musk tweeted--twice--that New York residents should call their state senators.

Bottom-ranked for openness

The New York State Legislature has been rated among the lowest of all 50 states by good-government groups on issues as diverse as transparency, gerrymandering, and achievement.

It customarily passes a rush of bills on its last day (and fails to take action on many more).

Many of those bills have never been read by the elected officials voting on them, and were agreed to in closed-door meetings among the governor, the assembly speaker, and the leader of the state senate.

In April, a New York state court ruled that auto dealers could not prove they had been injured by Tesla's operations in the state, and dismissed their lawsuit.

EDITOR'S NOTE: This story has been updated numerous times as we received further details on the legislation.

UPDATE: Tesla Motors issued a formal statement on the matter Friday at 2 pm Eastern. We have reprinted the statement in full on the next page.


 
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