While Tesla is free to do business without restriction in many states, they're running into serious roadblocks in several others. While they're engaged in a last-ditch effort to salvage legislation in Connecticut, Tesla's also waging simultaneous legal fights in North Caroline, Utah, and Georgia.
In North Carolina, the state Department of Transportation appears to be stonewalling Tesla's attempts to acquire a second dealership license. Telsa currently operates one Tesla Store in Raleigh and a Gallery + Service Center in Charlotte, after prevailing in a 2013 legislative fight that saw the state dealership association pushing a bill that would have banned direct sales outright. The NCDOT's heading into a third day of hearings with testimony from Tesla and the state dealership association. Testimony from the public has not been allowed, so North Carolina native, ARCA racecar driver, and Tesla Model S owner Leilani Münter offered her own open letter to the NCDOT committee via Medium.
But in Utah, where Tesla built a $3 million Tesla Store in Salt Lake City and it wasn't until afterwards that state officials decided that Utah law prohibited direct sales from manufacturers to customers, Tesla is taking their fight to the courtroom. According to the KSL, Tesla is challenging the ruling in the Utah Supreme Court. Tesla just a few months ago withdrew support for legislation in Utah that was on the surface supposed to open up the state to sales from Tesla, arguing that it put too many restrictions on potential company-owned stores, like disallowing on-the-ground inventory and barring customer financing.
And in Georgia, where Tesla's been permitted to open five stores by special legislation passed in March 2015, the company just opened fourth Tesla Store, this one northern Atlanta suburb of Alpharetta. The five-store limit was, as The Atlanta Journal-Constitution put it, "begrudgingly created" by lawmakers after a lawsuit by dealers led to Tesla arguing there was a loophole that permitted their access. The law was written such that on Tesla would qualify for the exemption.
"Tesla is the first," Bill Morie, the president of the Georgia Automobile Dealers Association, told me last year. "Hopefully, it will be the last."
Recently, Morie stressed to me again how the independent dealership system gives consumers price competition for the same models and acts as a consumer advocate to deal with recalls and service issues.
He isn't interested in Tesla getting any more sales outlets to serve consumers.
While Tesla still has one potential store in reserve for Georgia, Tesla is apparently satisfied with the limitations. For now — once the Tesla Model 3 goes on sale in late 2017, we'd expect that to change.
Thanks to the federation structure of the United States, Tesla faces varying legal landscapes in each of the 50 states. While several states have passed legislation to allow Tesla Stores or never had such laws on the books, many have laws blocking direct sales. This is not an issue that Tesla has faced in any other nation where they do business — on the Tesla Q1 2016 earnings call, Tesla CEO Elon Musk called out the dealership associations fighting them across the country:
What's happening is that dealers are using vestigial legislation that was originally put in for a just purpose — which is to protect them from predatory practices from the franchisor — and have been using it for an unjust purpose which is to prevent direct distribution. We believe that in the long term justice will prevail.