Monday, 03 March 2014 12:59

Ohio Dealers Renew Attempt to Block Tesla Store Model

The Ohio Automobile Dealers Association is pushing legislation that it says will amend the state dealer franchise law to more explicitly ban factory-owned stores. Association leaders contend that the existing Ohio law should have prevented Tesla from getting licenses for its stores in Cincinnati and Columbus, according to an article in Automotive News.

“The legislation reinforces what we’ve always believed the laws to be: that a manufacturer cannot hold a dealer’s license to sell vehicles at retail,” said Sara Bruce, the association vice president of legal affairs. “If there was any misunderstanding of what the law is or what the definition of a new motor dealer is, this certainly does clarify it.”

A Tesla executive says that the electric vehicle maker stores in Ohio comply with current state law and that the company properly applied for and received the licenses. “The Tesla approach doesn’t hurt existing dealerships,” said Diarmuid O’Connell, Tesla vice president of business development.

“We’re not out to eviscerate the dealer business model,” O’Connell told Automotive News. “We’re out there simply to introduce a new technology in the manner we think is most effective.”

While the legislative battle plays out, the dealers association and some of its members also are deciding whether to appeal the dismissal of their lawsuit against Tesla and the Ohio agencies that issue dealer licenses.

A court magistrate dismissed that lawsuit on February 6, 2014, ruling that the plaintiffs lacked standing to sue.

Tesla executives and representatives from the Ohio dealers association testified last week on the proposed legislation at Ohio Senate committee hearings. Previous efforts by the dealers association to amend the statute failed late last year.

James Chen, Tesla vice president of regulatory affairs, told senators that passage of the bill would limit consumer choice, stifle inter-brand competition, and allow Ohio dealers to establish a monopoly that current law does not allow.

Joe Cannon, vice president of government relations for the Ohio dealers association, told senators that the Tesla store licensing opens the door for all manufacturers—both emerging and existing—to follow the same path. “That puts dealership employment and the substantial investments dealers have made in their communities at risk,” he said.