An executive for electric car manufacturer Tesla made a case to lawmakers Friday for permission to bypass auto dealers and sell its vehicles directly to Connecticut consumers.
State law currently prevents the company from selling its vehicles in Connecticut and car dealers say the sales should be conducted through third-party dealers, as is the case with most cars.
But Diarmuid O’Connell, a vice president of Tesla, told the Transportation Committee that a special exception should be made for the small company that is looking to fundamentally change the automobile market.
“In these early stages, we’re focused on direct contact with our customers because we’re evangelists, to put it simply, we’re trying to represent this technology ourselves. Who knows it better than us?” he said. “We’re not operating through a middleman because we want people to understand very clearly what’s at stake here.”
O’Connell said the company sold only about 30,000 cars last year. But once the manufacturer is producing more vehicles, he said, Tesla may be open to a “hybrid” model, in which the company sells some of its cars through dealers.
Auto dealers say Tesla’s nascent status poses a risk to consumers who buy the cars: Who will maintain the cars if the new company goes out of business? Jim Fleming, president of the Connecticut Automotive Retailers Association, said dealerships help mitigate that risk.
“Saab is the most recent example. When Saab went out of business, it was the local franchise dealers that made sure that they had parts, had somebody to service it,” Fleming said. “This is a consumer protection issue, despite what Tesla’s trying to say about their great product. They are a new company and they’ve never made a profit.”
Lawmakers on the Transportation Committee seemed to be considering allowing Tesla to open a limited number of stores in Connecticut. The panel’s co-chairman, Rep. Tony Guerrera, D-Rocky Hill, asked O’Connell if Tesla would accept a bill permitting it to open four or five stores. O’Connell said a similar model had worked in other states where Tesla operated.
Other lawmakers voiced concerns about the economic impact Tesla could have on existing Connecticut auto dealers. Rep. Russ Morin, D- Wethersfield, said his stepfather was an auto dealer in addition to being a state lawmaker.
“He employed a lot of people. He provided jobs and he provided services and I think we need to at least recognize that,” he said, adding that he was open to the bill. “I just want to at least have my colleagues hear that when we talk about jobs, there’s a lot of dealers out there that are providing good jobs for many people.”
Sen. Art Linares, the Westbrook Republican who proposed the bill, told the committee he had to travel out of state to purchase a Tesla vehicle. He said other consumers would do the same unless lawmakers allowed their sale here. Thirty-five other states allow the company to sell directly to residents, he said.
“At a time when our country is trying to rid itself of dependence on foreign oil, we should welcome the sale of fully electric Teslas with open arms,” he said.
Although auto dealers are hoping Tesla will consider deviating from its direct-to-consumer model here in Connecticut, O’Connell ruled that out during Friday’s hearing.
“So it’s either grant the exception or you’re unable to come to Connecticut?” Sen. Carlo Leone, D-Stamford, asked.
“That’s correct,” O’Connell said.
At an unrelated event, Gov. Dannel P. Malloy declined to take a position on the issue, saying it was something the legislature would need to figure out.
“I think I understand the auto dealers take on it,” Malloy said. “They’ve invested in bricks and mortar auto dealership and service. On the other hand, you can buy a used car over the Internet so I suppose this is a balancing situation that the legislature will wrestle with.”