Electric 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.
The 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.