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Tesla Scores Win Against Car Dealers In Ohio As Amendment Is Defeated

Illustration for article titled Tesla Scores Win Against Car Dealers In Ohio As Amendment Is Defeated

Elon Musk and Tesla Motors 1, Ohio's car dealers 0. The nascent electric automaker scored a win yesterday in a surprise battle over direct auto sales that sprung up in the Ohio State Senate.

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As you've no doubt heard by now, Tesla wants to sell their Model S and other upcoming cars direct to customers instead of through a third party like a car dealer. The car dealers feel threatened by this, and so they've used their considerable political clout (read: deep pockets) to try and pass or strengthen laws to ban direct sales in states like Texas and New York.

The latest fight happened in Ohio yesterday, where the Ohio Dealers Association pushed for an amendment to Ohio Senate Bill 137. That bill is pretty innocuous — it requires drivers to move to the left lane on the highway to avoid maintenance vehicles on the side of the road. But the bill came with a rider that, if passed, would prevent "a manufacturer or a subsidiary, parent, or affiliated entity of a manufacturer" from selling a vehicle in the Buckeye State.

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Naturally, Tesla called on its supporters to reach out to their elected officials in Ohio and speak out against the bill. It must have worked. According to Green Car Reports, the amendment was struck down yesterday, and the unamended SB137 passed unanimously.

As someone who believes Tesla (and any carmaker, really) should be allowed to sell their products pretty much however the hell they want, I take this as great news. But as Forbes notes, the fight isn't over in Ohio just yet:

Yesterday, in a blow for capitalism and common sense, the Ohio House declined to attach the amendment to the bill. For the moment, Tesla is free to open dealerships there, but the battle isn’t done. The legislature wants to look at the issue in greater depth again next year.

But in Ohio, existing franchise law made that leap impossible. The only reason an anti-Tesla law was needed was because the company had no existing dealerships to compete with. GM, Ford, or Audi already couldn’t open a corporate-owned dealership in Ohio whether or not the new law passed. But that didn’t stop Rhett Ricart, owner of a dealership in Groveport, Ohio from hyperbolically declaring: “Tesla is Armageddon” and insisting the legislation was needed.

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Emphasis mine. Clearly, car dealers in Ohio and every other state aren't going to take this lying down; they fear Tesla could open the floodgates to every other manufacturer performing direct sales, which creates competition and threatens them with irrelevance.

Tesla's direct sales are currently banned in Texas and Arizona and are in legal limbo in other states. In Ohio, they have one store in Columbus and may accelerate plans to open more before the legislation re-emerges next year, Forbes says.

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As I mentioned in yesterday's Morning Shift, Musk's best plan is probably going to be to fight this at the federal level. I have a feeling that will be coming sooner rather than later.

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DISCUSSION

JamesBob-TX
JamesBob-TX

I get why people are excited about bypassing dealer, they are universally hated and such, my question is does anyone realize everything a dealer actually does?

A typical transaction when purchasing a vehicle includes appraising a person's trade, setting up financing, a thorough pre-delivery inspection of the vehicle, pre-delivery servicing, teaching the consumer how to use the new vehicle, having someone on-site to answer questions for weeks or months post-sale, being able to quickly service the vehicle locally should issues arise post-sale and so on. How will Tesla do this, what nationwide infrastructure is in place so when a consumer has an issue it can be attended to either same day or that week? What about loaner cars, does Tesla have a system in place to put consumers in loaner cars if the need arises, rentals are fine but that gets expensive and the customer still has to get to the rental car agency?

Go look at your average dealership, all those buildings have people in them that do things, how will Tesla do those things? When things get ugly, like lemon law ugly (which they will, it happens to everyone), are you going to be forced to handle that over the phone and through emails? I have been in this industry for a few years, I own a small used car lot and I simply can not see how Tesla thinks this is sustainable, are they really going to fly someone out EVERY-TIME a car needs servicing? These are real questions and besides the normal taking of sides I have heard no answers, does Tesla have them?