Tesla Faces Off Against Car Dealers In Another State: Ohio

December 3, 2013

Once more into the fray: Another state's car dealers are pushing for legislation to ban Tesla Motors from selling its electric cars directly to buyers.

This time it's Ohio. And legislators have unexpectedly moved up a hearing on the new law to today, according to a letter from Tesla Motors [NSDQ:TSLA].

The hearing takes place early this afternoon..

The Ohio Dealers Association is backing an amendment to Ohio Senate Bill 137--an unrelated bill that requires Ohio drivers to move left so as to leave an empty lane between themselves and highway maintenance vehicles at the side of the road,

Attaching the anti-Tesla amendment to an uncontroversial bill already moving toward adoption could see it become law more quickly than on its own.

The proposed amendment would ban Tesla's practice of selling its electric cars directly to customers, who place their orders online with the company after seeing and learning about the Model S in company-owned stores.

That would require Tesla to transact its sales through independently-owned third parties, which is to say, traditional car dealerships.

The full text of the proposed amendment to bill 137 reads as follows:

517.12 Denial of license as motor vehicle dealer, motor vehicle leasing dealer, manufactured home broker, or motor vehicle auction owner.

(A) The registrar of motor vehicles shall deny the application of any person for a license as a motor vehicle dealer, motor vehicle leasing dealer, or motor vehicle auction owner and refuse to issue the license if the registrar finds that the applicant:

(11) Is a manufacturer or a subsidiary, parent, or affiliated entity of a manufacturer. applying for a license to sell or lease new or used vehicles at retail. Nothing in this division shall prohibit a manufacturer from disposing of vehicles at wholesale at the termination of a consumer lease through a motor vehicle auction. This division shall not serve as a basis for termination, revocation, or non-renewal of a license granted prior to the effective date of this provision.

Tesla suggests the amendment wouldn't just harm Model S (and future Tesla) customers in the state, but the state itself.

Ohio companies have supplied $10 million in parts and components this year to build Model S cars, the company says. And proposed Tesla facilities in Dublin, Columbus, and Cincinnati would employ 26 people and add $7 million in "direct economic activity" to the state.

The state is also part of Tesla's plans for its Supercharger fast-charging network--benefiting owners not just in Ohio, but in surrounding states too.

Tesla may turn to the same tactics it has used elsewhere to encourage legislators to make the right decision. In some states, it appears, a drive in a Model S is all that has been needed for some decision-makers to change their minds.

[UPDATE] In fact, Tesla has already done exactly that: The Columbus Dispatch carries photographs of members of the Ohio legislature testing out the Model S--an 85 kWh Performance model, naturally.

If it has the same effect as test drives in other states have had, it could be a wise move indeed. Bloomberg reports that legislation against Tesla's direct selling in North Carolina was dropped completely after lawmakers and the state governor got behind the wheel. New York too dropped a similar bill.

While a similar tactic didn't work in Texas, lawmakers and politicians there too were reportedly impressed with the car.

Tesla has urged its Ohio owners and supporters to attend the hearing in Ohio Statehouse Room 122 at 1:30 pm today.

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