Barring Tesla stores in Connecticut hurts the state
I walked into the state Capitol last Wednesday and who did I see? A Tesla executive with lobbyists in tow, preparing to buttonhole a few lawmakers.
Are you kidding me? After three full years of trying, now entering its fourth year, Tesla still hasn’t gained the right to open stores in Connecticut to sell the company’s all-electric cars directly to residents.
Good morning, Connecticut! It’s 2018! Time to get out of bed. This bill should have passed back in 2015, when Tesla was a newer brand and Connecticut’s national reputation for tight business regulation less critical, less of an economic black eye.
“It’s like Groundhog Day,” said Will Nicholas, policy manager for Tesla.
Groundhog Day was funny. This is idiotic. It’s the auto dealers exerting political muscle to stop progress in a state that desperately needs to move forward.
To review, Tesla sells cars directly to buyers without going through franchised dealers. In many states, including Connecticut, manufacturers can’t own auto dealer franchises, and new cars are only sold through franchises.
Naturally, Tesla wants the right to open stores in the nation’s richest state. It needs a new law to do so.
The Connecticut Auto Retailers Association, equally naturally, has fought the law. The association, headed by James Fleming, a former state senator from Simsbury, says the law requiring independent franchises is not a relic of the past.
Fleming says it’s a sensible protection for consumers to have a dealer that’s “on their side” in case of disputes with giant, distant manufacturers.
Fleming says many of the 14,000 jobs at auto dealers could be at stake if the franchise system were to collapse. The dealers are pillars in every community where they operate.
Both sides have fought this battle honorably and reasonably since early 2015. They’re willing to negotiate. For example, the association appeared to endorse a compromise in 2015 that would have limited Tesla to three stores in Connecticut.
That law would have allowed direct sales only for U.S.-based makers of electric cars, not manufacturers that make hybrid or gas-powered cars. Unless there’s another Elon Musk, the billionaire Tesla founder, that pretty much means Tesla and Tesla only would be allowed to open direct-sales stores.
The 2015 compromise fell apart because too many legislators, including Sen. Beth Bye, D-Hartford, had promised their local auto dealers they’d vote against it. At least Bye admitted it; most don’t.
The one time the Tesla measure has come to a vote, in the state House in 2015, it won overwhelmingly. But it hasn’t come up for a vote since then. That’s politics and that’s fine, in many disputes.
But in this case, three years later, blocking Tesla is hurting Connecticut for two reasons. First, it makes us look anti-modern; or rather, it reminds the rest of the country that our laws are sometimes stuck in the past without good reason. That alone hurts our already battered and partly unfair reputation as a business-unfriendly state.
Second, it’s costing us money. The sales tax on the 1,600 Teslas now registered in Connecticut would have yielded $5 million for state coffers, and that’s just the start. Tesla would staff each dealership with at least 25 people, and would spend millions of dollars on new facilities.
Just last year, Tesla built a Northeast regional parts and distribution facility in Bethlehem, Pa. Connecticut missed the chance to compete for that because of its laws, Nicholas said.
The franchise system came with the start of the car revolution, early in the 20th century. Commerce was much more local in those days and the car industry was new enough that we wanted every sale to go through a dealer.
Auto dealers still serve an important purpose both as sellers and as community supporters. Many have public and nonprofit buildings named after them.
None of that should change if Tesla is allowed to sell cars directly. Unlike health care, cable TV, mobile phones and drugstores, the auto industry has enough competition that consumers would have real choices. If a dealer offers better service, car buyers would buy through dealers.
There is a hardball aspect to this honorable dispute. Tesla opened a “non-sales” gallery on Greenwich Avenue in Greenwich — leading to a dispute over whether that showroom is illegally selling cars without a franchise license. The auto dealers association cried foul and the fight is still in court.
But that shouldn’t affect legislation going forward. Three years later, it’s clear that Tesla is here to stay, with a new model priced as low as $35,000, and electric cars are gaining market share. That’s a main reason Gov. Dannel P. Malloy cites for raising the gasoline tax.
The future is here. We don’t have to like all of it. I wish newspapers were still the only place to get news and we could stop out-of-state companies from posting local news on websites. Not gonna happen.
And it’s not gonna happen that Connecticut residents don’t buy the cars they want.
The only question now is whether Tesla should be limited to three locations in the state. Years into a ridiculous dispute, that compromise — which dealers could have had in 2015 — is starting to look like a quaint relic of the past.