Legislation now under consideration in Washington state would effectively prevent Tesla Motors from opening new stores in the state beyond its existing locations in the Seattle region — the latest development in the electric car maker’s national struggle against the traditional auto dealership model.
Tesla is vowing to fight the legislation, calling it an effort by traditional auto dealers to combat the company’s growth and expansion.
The stakes are high: Tech-savvy Washington was the top state in the country for Tesla sales last year, measured as a proportion of overall new vehicle registrations in the state, according to data from auto researcher Hedges & Co., cited by Bloomberg Businessweek.
The proposed legislation “basically freezes us where we are,” allowing no further expansion in Washington state beyond existing locations in Seattle and Bellevue, said James Chen, Tesla’s vice president of regulatory affairs and associate general counsel, via phone this afternoon.
Chen said he considers the legislation ironic under the circumstances: ”Here is Washington state, the leader in seeking clean power, clean air, clean water, and standing for innovation in technology, the home of Amazon.com, and yet there’s legislation that is basically stifling an innovative car company, an American car company, that is trying to get us off our dependence on foreign oil and reduce the emissions profile of the light duty vehicles,” he said.
“You’re looking at basically a special interest group, the dealers, trying to establish through the law a monopoly on how consumers can purchase products,” Chen said.
The original intent of these types of regulations was to prevent auto manufacturers from competing with their own licensed dealers, he explained, but Tesla sells direct to consumers and isn’t competing with its own licensed dealers when it opens its own stores.
Officials with the Washington State Auto Dealers weren’t available to discuss the legislation this afternoon. We’ve also left messages with two state legislators sponsoring the two bills — SB 6272 and the companion HB 2524 — and we’ll update this post depending on what we hear back.
Tesla has successfully fought off similar legislative efforts in other states, including North Carolina, but Washington state is one of several ongoing battlegrounds for the electric car maker, led by CEO Elon Musk.
UPDATE: Rep. Reuven Carlyle, who chairs the state’s finance committee, is not too wild about the idea. He sent us this statement about the legislation this evening:
“Tesla’s embrace of a direct, open competition sales approach is exactly what we say we want from old style, traditional industries to survive—innovation, creativity and an entrepreneurial spirit. The ridiculous notion that the political process in the Legislature should intervene in the marketplace of ideas in the automobile industry to prevent Tesla from direct sales is patronizing at best, and many of us are committed to defeating this special interest legislation.”