A bill to allow Tesla Motors to circumvent local car dealerships and sell their electric vehicles directly to consumers in Connecticut has advanced.
The Finance, Revenue, and Bonding Committee Monday afternoon voted 32-14 in favor of the bill, with five members absent.
Committee Co-Chairman Sen. John Fonfara, D-Hartford, said it is the committee’s charge to come up with ways to make money. “And I feel this bill is a potential revenue gain to the state of Connecticut and municipalities.”
But Rep. Chris Davis, R-East Windsor, who voted against, said the bill seeks to give California-based Tesla preferential treatment.
“This would benefit Tesla,” Davis said. “Other car manufacturers would like to receive the same benefit. It’s not right.”
Sen. Toni Boucher, R-Wilton, voted in favor.
“We are losing sales to other states” where Tesla can sell directly to customers, Boucher said. “There is an economic incentive to moving this (bill) forward.”
The vote in favor came despite a heavy lobbying effort by the Connecticut Automotive Retailers Association against the bill.
The legislation car dealers oppose would allow an electric car company like Tesla to open three retail locations in the state. Tesla is currently prohibited from selling vehicles the state. Customers must complete the transaction out of state and then register and pay sales taxes on them in Connecticut.
A similar bill cleared the House of Representatives last year, but stalled in the Senate.
James Fleming, president of the Connecticut Automotive Retailers Association, at a March 1 press conference on the bill said the franchise system works and is competitive.
“It understands the local market. It benefits consumers in price, selection, service and it’s committed locally in the communities where the dealerships are located,” Fleming said. “Tesla has never made a profit in that eight-year time period.”
Tesla Motors told investors in February that it expects to be profitable in 2016, and in April the company reportedly accepted $325 million in pre-order deposits for 325,000 of its Model 3 series, which was designed and priced for the mass market at around $42,000. Before the Model 3 orders began rolling in the company reportedly had only produced about 200,000 vehicles.
Elon Musk, CEO and founder of Tesla, wrote in a blog post in 2012 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.”
But Fleming said he hopes Tesla will revise its request to the Connecticut General Assembly and will agree to sell its vehicles through dealerships. There are currently 32 manufacturers whose electric vehicles are sold in Connecticut by 260 of the state’s 270 dealerships.