A University of Connecticut economic study, commissioned by state auto dealers, warned this month against the passage of a bill to allow the direct-to-consumer sales of some electric vehicles, saying that bypassing state dealership laws could damage its economy.
“Bill 127 further undermines reinvigoration of Connecticut’s economy and ought not to be passed,” UConn economists Fred Carstensen and Peter Gunther wrote at the end of the 15-page report.
The analysis attempts to estimate the negative economic impact which auto dealers have long predicted if the state allows certain electric car manufacturers to sell vehicles at showrooms. Current law requires manufacturers to sell their products through franchise dealerships. Some exclusively electric vehicle makers like Tesla insist on selling directly to customers. As a result, Connecticut residents must travel out of state to buy one of the vehicles.
The bill, which passed out of the legislature’s Transportation Committee and is awaiting action in the Senate, would carve a narrow exception for companies like Tesla, Lucid and Rivian whose products are strictly electric.
Although the legislature has debated some version of the concept for years, in the past, the CT Automotive Retailers Association has successfully fended off the change, saying it created an unfair exception that would hurt their businesses.
The Connecticut Center for Economic Analysis report, released this month, forecasted that the bill could result in more than 40,000 possible job losses by 2040. During the same time period, it predicted billions in lost economic activity and more than $430 million in lost tax revenue.
“It clouds dealers’ and their employees’ futures while threatening sales and vehicle service levels that Connecticut customers legitimately expect,” the report said. “If the current structure for marketing is maintained, the playing field would remain level and the future clearer.”
However, Sen. Will Haskell, a Westport Democrat who is co-chairman of the Transportation Committee, said the report fundamentally misunderstands the bill, which applies to a small handful of companies that do not currently sell cars in Connecticut.
Haskell said the legislation includes a compromise which requires legacy manufacturers to continue to sell vehicles through dealership franchises even if they convert their entire fleet into electric vehicles.
On Tuesday, Haskell framed the bill as a job creation proposal.
“I feel sometimes like the world has turned upside down,” Haskell said. “Normally, I hear from my colleagues on the other side of the aisle that they want to bring more jobs and bring more businesses to Connecticut. Well here’s a handful of businesses — Lucid, Rivian, and Tesla — that want to open operations here … and for some reason we’re saying ‘No,’ saying that the free market can’t do its job.”
Although the issue is controversial, it is not partisan. The bill cleared the Transportation Committee in March with supporters and opponents on both sides of the aisle. Haskell said he was not yet sure if or when the proposal would be raised for a vote in the Senate. In 2015, the House passed a comparable bill but the Senate never raised it for a vote.
“My hope — and I’ve been hoping for some time — is that we can run this bill that is wildly popular with the general public,” Haskell said. “I’m really hopeful that this is finally the year to bring this bill across the finish line. It’s been debated far enough. It’s time to put this issue to rest.”