Tesla cars so easy to buy online, Ohio auto dealers want a law to shut them out

By Travis Gettys
Tuesday, February 11, 2014 14:34 EDT
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The Tesla Model X is introduced at the 2013 North American International Auto Show via AFP
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Auto dealers are pushing legislation that would keep Tesla Motors from selling cars in Ohio.

The American automaker sells its electric vehicles directly to customers, ensuring each buyer receives the same cost no matter where they buy their Tesla car.

“You can do everything on your computer — it’s so much easier,” Sunjay Kumar told The (Cleveland) Plain Dealer. “You really can’t negotiate anything, so it takes the headache out of that.”

That business model poses a direct threat to dealers who sell other vehicle brands.

They’re backing Senate Bill 260, sponsored by Sen. Tom Patton (R), which would explicitly prohibit the state from issuing dealer licenses to manufacturers – including Tesla.

They argue that Ohio’s Bureau of Motor Vehicles violated a rule requiring dealerships to have a contract with a car manufacturer when it allowed Tesla to sell vehicles in the state.

“We think everybody ought to be held to the same standard,” said Tim Doran, president of the Ohio Automobile Dealers Association. “We thought that was the policy that was agreed to for more than a couple decades and the BMV, frankly, out of the blue, went 180 degrees out of their policy — that’s why we’re here.”

The California-based manufacturer has showrooms in Cincinnati and Columbus, with another in Cleveland placed on hold while the company fights the legislative challenge to its business model.

He argues the Senate bill places the state’s 830 dealers on competitive footing with Tesla and other manufacturers.

Doran said Ohio dealers are heavily invested in their showrooms and employ more than 50,000 workers statewide.

The trade organization contributed more than $100,000 to Ohio state lawmakers last year, according to campaign finance records.

A spokesman for Tesla Motors told The Plain Dealer that the manufacturer sold just 300 of its vehicles – which cost about $70,000 or more – last year in Ohio and makes about 20,000 vehicles a year, compared to 15 million to 17 million gas-powered cars.

Tesla spokesman James Chen said competition among dealers is already protected by Ohio franchise laws, but those exclude companies such as Tesla that don’t offer franchises.

“They want to protect their monopoly,” Chen said. “If there’s one crack in the door — the argument they’ve put forth is other manufacturers could do the same thing.”

Similar legislation was proposed last year by state lawmakers, and central Ohio dealers and the statewide association sued Tesla and the BMV over the license issued to the manufacturer.

A Franklin County Common Pleas Court judge dismissed the suit in January, ruling that the dealers did not have legal standing to sue.

At two other states place some restrictions on Tesla’s business model.

Tesla operates two showrooms in Texas, but employees are not allowed to assist customers with purchases or offer test drives of the vehicles.

Arizona prohibits the sale of Tesla vehicles in the state, but the company operates one “gallery” there.

[Image via Agence France-Presse]

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