Tesla Motors offered to make some concessions to get legislation passed that would allow it to sell its electric vehicles directly to Connecticut consumers.
State law currently prevents the company from selling its vehicles in Connecticut. Car dealers say the sales should be conducted through franchise agreements, as is the case with most cars.
Officials from Tesla said Tuesday that they understand the arguments and are willing to make concessions based on the auto dealer’s concerns. Tesla officials said if the legislation and concessions became law, it “would result in the most restrictive limits on Tesla of any of the 35 states where Tesla has operations.”
But the Connecticut Auto Retailers Association wasn’t willing to budge.
“Our position remains, Tesla should not be given a loophole around the current franchise dealerships system that maintains consumer protections, helps create a safe driving environment and is a significant contributor to the local economy,” James Fleming, president of the Connecticut Automotive Retailers Association, said Tuesday.
Jim Chen, vice president of regulatory affairs and associate general counsel at Tesla Motors, said the auto dealers are just “protecting a monopoly and being greedy trying to control a business they can’t.”
Chen said the concessions they offered are the most they’ve offered in any state where they sell their vehicles. He said the lack of response from the auto dealers is their attempt to “run the clock out on this bill.”
In his statement Tuesday, Fleming said the legislature should wait two years to find out if “Tesla becomes a viable, profitable company” and whether it’s worth “considering a loophole” for the California company.
Tesla does have a service center and gallery in Milford where Connecticut consumers can test drive the vehicle, but no one at that location can talk about pricing. Instead, consumers need to call a New York sales location to speak with someone specifically about pricing the vehicle, or they can configure the car on the Tesla website.
According to Tesla, during the Feb. 24 meeting with Transportation Committee Chairman Antonio Guerrera, the Connecticut Auto Retailers Association expressed concern that other manufacturers like Ford or Toyota would try to replicate Tesla’s approach to sell directly to consumers.
“Tesla offered that for a manufacturer to apply for a license, a manufacturer must not currently use any independent franchised dealers,” company officials said in a statement.
Tesla also agreed to “restrict the sale direct to consumers to only those manufacturers producing solely electric vehicles” and to limit their sales locations to five.
And in order to make sure no other electric vehicle company comes into the state and tries to sell a vehicle outside a dealership they suggested lawmakers only give a license to an electric vehicle manufacturer with a presence in the state as of 2013. That’s the year Tesla established its service location in Milford.
Connecticut’s current law requires that any new vehicle be sold to a consumer by a franchise that is not owned by the manufacturer. Each dealer location must be at least 14 miles away from another dealership selling the same brand.
Fleming has said franchise statutes have held up over the years because there was no fair bargaining position between a small dealer and a multinational corporation.
Elon Musk, CEO and founder of Tesla, disagreed when he blogged about similar legislation in New Jersey last year.
Musk wrote that the intent of the franchise agreement “was simply to prevent a fair and longstanding deal between an existing auto company and its dealers from being broken, not to prevent a new company that has no franchisees from selling directly to consumers.”
He wrote that the reason they did not seek to sell their cars through dealerships was because dealers “have a fundamental conflict of interest between promoting gasoline cars, which constitute virtually all of their revenue, and electric cars, which constitute virtually none.”