‘Tesla bill’ aims to open up car sales

Au­tomaker sells di­rectly to pub­lic, but state re­quires that deal­ers sell ve­hi­cles

Santa Fe New Mexican - - FRONT PAGE - By Teya Vitu [email protected]­i­can.com

One by one, Tesla has con­vinced 23 states and Washington, D.C., to al­low the mav­er­ick elec­tric car­maker the abil­ity to sell di­rectly to the pub­lic as a li­censed dealer.

So far, New Mex­ico is not one of them.

About 600 New Mex­i­cans own Tes­las. But there are no Tesla show­rooms or ser­vice cen­ters here, and own­ers ei­ther have to leave the state to buy or ser­vice their ve­hi­cles — or have the com­pany de­liver them to the door by truck.

State Sen. Ger­ald Or­tiz y Pino, an Al­bu­querque Demo­crat, pro­poses amend­ing a state law that pro­hibits ve­hi­cle man­u­fac­tur­ers from sell­ing di­rectly to con­sumers rather than through an in­de­pen­dent fran­chise deal­er­ship.

His Sen­ate Bill 243 would al­low “mo­tor ve­hi­cle man­u­fac­tur­ers to be li­censed as mo­tor ve­hi­cle deal­ers un­der cer­tain con­di­tions.”

It’s in­for­mally called “the Tesla bill,” though state law pro­hibits leg­is­la­tion for one busi­ness. The spirit of the bill is to give an ex­cep­tion to elec­tric or al­ter­na­tive fuel car com­pa­nies, but the bill as orig­i­nally sub­mit­ted sim­ply men­tions “mo­tor ve­hi­cle man­u­fac­tur­ers.”

“We ad­justed the bill,” Or­tiz y Pino said. “It pro­vides an ex­cep­tion for all elec­tric ve­hi­cles man­u­fac­tured in the U.S.”

The bill passed the first hur­dle Feb. 1 in the Sen­ate Pub­lic Af­fairs Com­mit­tee and now is headed to the Sen­ate Cor­po­ra­tions and Trans­porta­tion Com­mit­tee.

Tesla’s na­tion­wide cam­paign to crack a na­tional tra­di­tion dat­ing back to the

1930s and ’40s has end­less com­plex­i­ties as op­pos­ing camps seek to change or re­tain the new car deal­er­ship setup.

Re­duced to the sim­plest el­e­ments: Sup­port­ers see many tra­di­tions are chang­ing, and al­low­ing Tesla to serve as its own dealer falls in line with that. Op­po­nents like the in­de­pen­dent car deal­er­ship sys­tem the way it is.

“All we’re ask­ing them to do is do it un­der the same laws that ev­ery dealer does,” said Charles Hen­son, pres­i­dent of the New Mex­ico Au­to­mo­tive Deal­ers As­so­ci­a­tion. “… Tesla says they can’t do that. It doesn’t fit their busi­ness model.”

Tesla works on a fixed-price model, not of­fer­ing ne­go­ti­ated dis­counts as tra­di­tional deal­ers do. Also, Tesla in­sists on com­pany-cer­ti­fied tech­ni­cians ser­vic­ing its ve­hi­cles and not leav­ing ser­vic­ing to in­de­pen­dent deal­er­ships, said Mered­ith Roberts, Tes­las’s pol­icy and busi­ness de­vel­op­ment di­rec­tor.

Tesla Chair­man and CEO Elon Musk in 2012 ex­pounded on the Tesla ap­proach to dis­tribut­ing and ser­vic­ing cars.

“Tesla … would rarely have the op­por­tu­nity to ed­u­cate po­ten­tial cus­tomers about Model S if we were po­si­tioned in typ­i­cal auto dealer lo­ca­tions,” Musk wrote. “That is why we are de­lib­er­ately po­si­tion­ing our store and gallery lo­ca­tions in high foot traf­fic, high vis­i­bil­ity re­tail venues, like malls and shop­ping streets that peo­ple reg­u­larly visit in a rel­a­tively open-minded buy­ing mood.”

SB 243 sup­port­ers look around the coun­try to more than half the states — 27 in all — al­low­ing Tesla show­rooms and gal­leries (Tesla has four states with only gal­leries where there are no test drives, nor are cars sold).

“Do we want to be the last state to al­low them to have a place to sell their cars? I don’t think so,” said state Sen. Bill Tall­man, an Al­bu­querque Demo­crat and co-spon­sor of SB 243. He’s also been a Tesla owner since June.

State Sen. Ron Griggs, an Alam­ogordo Repub­li­can, takes the op­po­site stance.

“When you look at all sort of states, if one guy does it should the other guy do it?” Griggs said. “Look at le­gal recre­ational mar­i­juana. It’s right for Colorado. Is it right for New Mex­ico?”

Colorado, Ari­zona and Utah all have Tesla stores and ser­vice cen­ters. Nine of the 23 states that al­low Tesla deal­er­ships limit the num­ber of stores.

Tesla does have nine fastcharg­ing su­per­charger sta­tions in New Mex­ico so Tesla driv­ers can “fill up” in Santa Fe, Al­bu­querque,

Las Ve­gas, Santa Rosa, Tu­cum­cari, Farm­ing­ton, Truth or Con­se­quences, Dem­ing and Gallup. Tesla also has 22 slow­er­charg­ing des­ti­na­tion charg­ing sta­tions in the state.

Brian Dear is one of the Tesla own­ers liv­ing in Santa Fe. He and his wife moved to New Mex­ico in 2015 from San Diego with­out re­al­iz­ing there were no Tesla stores or ser­vice cen­ters here. Dear quickly founded and re­mains pres­i­dent of the Tesla Own­ers Club of New Mex­ico, which has about 250 mem­bers.

“I vis­ited auto deal­ers [in San Diego], Audi, BMW,” Dear said. “I asked them: ‘Can you help me un­der­stand why New Mex­ico doesn’t al­low Tesla?’ They all laughed. They said ‘That’s nuts.’ You’ve got Tesla all over the place in Cal­i­for­nia. It seems to me a peace­ful co­ex­is­tence.”

Op­po­nents to Tesla’s ap­proach seem un­con­cerned by what other states are do­ing.

“That’s not the way the auto in­dus­try works in this state,” said state Sen. Stu­art In­gle, a Por­tales Repub­li­can and mi­nor­ity floor leader. “I don’t think this is some­thing I can sup­port. We need to have all deal­ers on an even keel with other deal­ers.”

Hen­son said the auto deal­ers as­so­ci­a­tion’s op­po­si­tion con­sid­ers the big­ger pic­ture.

“This bill would open the door for any elec­tric car man­u­fac­turer,” Hen­son said. “You would have at least seven other man­u­fac­tur­ers [around the world] want­ing to come in.”

The state as­so­ci­a­tion has 114 new car dealer mem­bers out of an es­ti­mated 125 new car deal­er­ships in the state. The mem­ber deal­er­ships have 15,228 em­ploy­ees, and new and used car deal­er­ships sell about 99,000 cars a year in New Mex­ico, Hen­son said.

Tesla own­er­ship is still a tiny frac­tion of the 2.46 mil­lion ve­hi­cles reg­is­tered in New Mex­ico, ac­cord­ing to the state Mo­tor Ve­hi­cle Di­vi­sion.

Hen­son said au­to­mo­bile deal­er­ships are not like other re­tail busi­ness. Car deal­ers are li­censed by states like banks, at­tor­neys and doc­tors.

A con­cern, he said, is what hap­pens if a car man­u­fac­turer who sells di­rectly to the pub­lic some­day goes belly up.

“The fran­chise sys­tem has pro­tec­tions for con­sumers, such as if a car brand goes down, like Saturn or Hum­mer [both Gen­eral Mo­tors brands], deal­er­ships will still ser­vice them,” Hen­son said.

Daniel Crane, as­so­ciate dean for fac­ulty and re­search at the Univer­sity of Michi­gan, said dealer ar­gu­ments are “com­pletely un­founded.”

“Con­sumer pro­tec­tion and pub­lic safety have noth­ing do with those re­stric­tions,” Crane wrote in a re­port called “Tesla and the Car Deal­ers’ Lobby.” “They are pro­tec­tion­ism for car deal­ers, pure and sim­ple.”

Griggs, the state se­na­tor from Alam­ogordo, said car deal­ers in his city and Carls­bad, also in his dis­trict, would op­pose SB 243.

“They be­lieve cus­tomer ser­vice is more doable the way they’ve done it,” Griggs said. “Ev­ery­body is con­cerned with some sort of changes. What change would we see from Chrysler and GM if Tesla did it?”

For his part, Dear said he be­lieves more than 1,000 Tesla cars will be in New Mex­ico by spring even with no deal­er­ships or ser­vice cen­ters.

Tall­man, the state se­na­tor, bought his used Tesla in Dal­las af­ter also look­ing in Den­ver and Phoenix.

“[The op­po­nents] don’t like it be­cause it is di­rect sales,” he said. “Ev­ery­thing is di­rect sales. The busi­ness world has moved on. It’s the fu­ture. It’s a re­stric­tion of trade. Amer­ica is all about com­pe­ti­tion.”

Tesla on Jan. 30 for the first time an­nounced quar­terly prof­its in con­sec­u­tive quar­ters, though the fourth quar­ter profit was lower than the third quar­ter.

Me­dia ac­counts through­out 2018 were rife with teasers like “Tesla: Elon Musk’s $999 mil­lion prob­lem,” “Tesla Slashes Spend­ing, and May Add to Its Trou­bles,” “Tesla sued by Nevada for fail­ure to pay $650,000 in taxes” and “Elon Musk should be more trans­par­ent about Tesla trou­bles.”

Hen­son cites Tesla’s in­sta­bil­ity now as a rea­son he thinks New Mex­ico should be wary.

“The Tesla we are en­gaged with to­day is not the Tesla of 12 months ago, 24 months ago, cer­tainly not 36 months ago,” Hen­son said.

Musk him­self in a Jan. 18 mes­sage to all Tesla em­ploy­ees wrote: “Tesla has only been pro­duc­ing cars for about a decade and we’re up against mas­sive, en­trenched com­peti­tors. The net ef­fect is that Tesla must work much harder than other man­u­fac­tur­ers to sur­vive while build­ing af­ford­able, sus­tain­able prod­ucts.”

Or­tiz y Pino looks upon al­low­ing elec­tric car man­u­fac­tur­ers to be li­censed deal­ers more prac­ti­cally.

“It has not brought West­ern civ­i­liza­tion down any­where,” Or­tiz y Pino said. “Any­thing we can do to re­duce fos­sil fuels is good. It’s clearly a di­rec­tion our so­ci­ety is go­ing.”


A Tesla is driven down Paseo de Per­alta ear­lier this month.


Brian Dear, founder and pres­i­dent of the Tesla Own­ers Club of New Mex­ico, is one of about 600 own­ers of the elec­tric cars in the state. When he moved here from San Diego, he was shocked to find the car­maker has no pres­ence in the state due to laws pro­tect­ing car deal­ers.


A Tesla charg­ing sta­tion at Fash­ion Out­lets of Santa Fe can ac­com­mo­date sev­eral ve­hi­cles. But they only make up about 600 of the 2.46 mil­lion reg­is­tered in the state.

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