tesla-1Electric car maker Tesla has secured a provision in the Washington state Legislature allowing the company to open as many additional stores as it wants in the state — a hard-fought victory against traditional auto dealers who attempted to block the company’s expansion.

However, the way the legislation has been rewritten, the exception applies only to Tesla, based on its existing vehicle dealer license in the state, and not to future auto manufacturers who might want to follow a similar model of selling vehicles directly to consumers.

The revised bill, which has now been passed by the Washington state House and Senate, retains the overall provision that prevents manufacturers from sidestepping the traditional auto dealership model in the state. However, a separate provision of the legislation carves out an exception for a “manufacturer that held a vehicle dealer license in this state on January 1, 2014.”

That is an implicit reference to Tesla, which has existing stores and service centers in Seattle and Bellevue.

tesla-chargerThe legislation, modifying existing laws related to auto franchises, still needs to go through the rest of the process and be signed by Gov. Jay Inslee before it becomes law. Tesla fans who rallied on the company’s behalf may be happy, but it’s a mixed victory for those who opposed the legislation on principle, questioning the logic of preventing any company from selling its own product directly to consumers.

Campaign finance records show that the primary sponsors of the House and Senate bills, Rep. Steve Kirby and Sen. Mike Hewitt, each received $1,800 in campaign contributions from the auto dealers during the 2012 election cycle, the maximum allowed per election.

The original intent of these types of regulations was to prevent auto manufacturers from competing with their own licensed dealers, but Tesla isn’t competing with its own licensed dealers when it opens its own stores, because it doesn’t have its own licensed dealers.

Tesla is fighting similar battles in other states around the country, but the stakes in Washington were especially high: 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.

Comments

  • 509

    We have “THE BEST GOVERNMENT MONEY CAN BUY”.

    • kandy830

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  • Empress de Snark

    Awwwww. My sympathy for “licensed dealers” is not measurable with even the most sensitive scientific instruments. Just more rent-seeking by obsolete middlemen who are on the wrong side of market forces, and destined to go the way of the dodo. Real estate agents, funeral directors, interior decorators, the taxicab lobby…none of these saps seem to have figured out that we don’t need them anymore, but they still manage to collect guaranteed rent from our corrupt politicians, in the form of special protections for their imaginary entitlement to profits. Our politicians think their job is to pick winners in the market. Funny how those winners always seem to be ones that have contributed to their campaigns.

    What really should’ve happened is a sidestep of the dealership requirement for EVERY new car sold in the state. But Tesla’s a start.

  • Viktor

    The title should say: “Tesla wins battle…. *and* future rivals are screwed” Good for them, bad for consumers, *and* surely profitable for Olympia – both in terms of continuing to benefit from their cheap populism and surely a few lobby $$…

  • WeaponZero

    The whole concept of these laws are to prevent auto manufacturers from competing with their dealers is silly.

    First of all, when a manufacturer signs a contract with a dealer, they have non-compete arrangements in a legal binding contract.

    Second of all, franchise laws already exist that prevent manufacturers from competing against their own franchises. At issue is that this legislation goes a step further and forces manufacturers to sign a contract if they want to do business. Kind of like a mafia shakedown.

    • sranger

      Well stated….

  • jonny

    Lets go step by step. Today Tesla wins, it can show how useless and unlikable dealers. Gradually that may open doors to others, but that will be a new battle.

    • sranger

      You are right. The dealers are not helping themselves here. They are point out that they need protections because everyone HATES doing business with them….

      Not a good idea to point that fact out over and over and over….

  • VoxPopper

    The law will be tossed out upon the first challenge. It can’t ban a business a practice for competitors and only allow it for a protected class. What a waste of time and effort, the law isnt worth the paper its printed on.

  • CGriffin

    For those who haven’t already heard this… The main reason Tesla MUST be able to sell directly to its customers, is because dealerships make the vast majority of their profits in the Service Department. Electric cars require very little maintenance; therefore an independent dealership that would also sell other brands of cars alongside Teslas, would not try very hard to sell the Teslas nor educate their customers on the advantages of EVs. The only way it would work is if the independent dealership were to be forced to only sell Teslas, and I doubt that would ever happen.

  • DougH2

    Where are the Republicans shouting “Free Market”? Oh yeah, they are being paid by the dealers. So they have to go where the money takes them.

    • tryingtocalmdown

      yo buddy, the dems are just as blameworthy in this case. it took both dems and reps to “fix” this.

    • CMCNestT .

      Where are the Dems screaming “protect the little guy” from $25 Billion Mega Corporations ?

      • DougH2

        Dems don’t scream that. Dems scream: Tax everyone fairly. Don’t give corporations tax breaks and tax individuals on at 14% (social security) on every dime they make and then tax corporations at a much lower effective rate.

        Obviously large corporations and little guys need each other. Just treat each the same.

        • CMCNestT .

          Dems scream that just as much as Reps scream “free market.” From $15/hr minimum wage for career hamburger flippers to the banality of protesting/ legally preventing Wal Mart opening a new store.
          Fairly tax everyone to a Dem means 47% don’t pay any federal income tax and the highly successful pay jimmycarteresque 70% marginal tax rates. The House is the only thing standing in the way from the Ds reaching into my wallet to take most of my money.
          Dems are all about giving Corporations tax breaks just corporations they approve when taking actions they approve of like “green energy.” GE gets tax breaks for energy efficient light bulbs so they pay an effective tax rate of 0%, Ford gets $5.9 Billion DOE subsidized loan to make “green” cars. Agriculture subsidies that mostly go to farms earning over a million dollars per year. Subsidies for ethanol. Solar and Wind farms. Dems are all about manipulating the economy with tax breaks and subsidies.
          Pigs will fly when the majority of Dems support a flat tax and a low effective corporate tax rate.
          Cheers!

  • Joe Shea

    I just discovered Geekwire, and as the “father” of Internet journalism – I started The American Reporter, the first online-only daily newspaper in April 1995,- I especially welcome a site that focuses on the contraptions reporters and others in the media can use to improve their news output. But who ever dreamed there would one day be such a niche?

  • DougH2

    The market fails to realize that dealerships exist for old Internal Combustion Engine (ICE) technology. They make most of their profit on repairing those propulsion and exhaust system. Electric Vehicles (EVs) have none of those. So most of the profit a dealership would make from EV would happen on the sale. Since maintenance like oil changes, transmission repair and maintenance, cooling systems, exhaust systems, and fuel system would go away for all intents and purposes, they would not be incentivized to sale EVs. That’s why Tesla decided to go another way.

    And guess what, it’s working for them and their customers, of which I am one. I’ve owned my Model S since June of 2013. I have put 30,000 miles on my MS since then. I’ve only replaced tires so far. And guess what, no one oil or filter change.

    Dealerships are for the ICE age not the modern EV age.

    • Mike

      What’s the warranty on your $35k battery?

  • Rep. Reuven Carlyle

    Here’s the inside Olympia story: The manufacturers where unenthusiastic at best about negotiating with Tesla until Rep. Matt Manweller (R-Ellensburg) and I introduce an amendment to strip the anti-direct sales to consumer provision from the bill. The agreement to specifically allow Tesla direct sales but not future entrepreneurial auto efforts was made under duress for those of us who support direct sales options. We fought for open and free markets and got at least partial victory.

    • Guest

      It is worrisome that the bill was allowed to gain any traction at all. It doesn’t really make politicians look good to the general population. People absolutely abhor the dealership sales process, and yet it’s being forced upon us by the people who’re supposed to be representing us. Instead, they represent the people who contribute to their campaigns. This is why the people are disgusted with their representatives.

      Thank you for looking out for the consumer; I wish that a bill opposing the dealership model would be introduced.

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