Tesla Motors’ efforts to open a dealership in South Salt Lake received a jolt after a rejection of a dealership license by the attorney general along with a failed attempt to alter a law at the Utah House. The bill, if passed, would have altered the present law, which makes possession of a dealership by a manufacturing company illegal, says a report from the Salt Lake Tribune.

Tesla South Salt Lake Dealership In Trouble After Bill Rejected

A loss for Utah?

The proposed bill HB394, put forward by Rep. Kim Coleman, R-West Jordan, hit a roadblock as the House refused to pass it. Coleman claimed the bill served as an agreement between Tesla and auto dealers but recognized the non-cooperative sentiment of manufacturers regarding the issue. He also asserted that if the existing laws regarding dealerships remain unchanged, Utah would miss out on the tax revenue and employment opportunities that Tesla would otherwise generate, says the report.

“It should not be illegal to purchase a Tesla automobile in Utah,” Coleman told the Salt Lake Tribune, adding, “We’ve created a black market for Tesla.”

The bill proposes a direct sales method, covering Tesla’s online sales model, which would create a new separate class of “online dealers.” Through this, automobile manufacturers could directly sell their products to consumers without having to reach them through third-party dealers. Also most of the laws for the existing dealership, such as the lemon law and other bonds, would have still been applicable had the bill passed.

A setback for Tesla

Tesla, which deals through direct, online sales, wished to open a showroom in South Salt Lake to provide customers with a space to test drive their cars. However, the refusal of HB394 by a 32-41 vote seems to have pushed the fate of the new Tesla showroom into a state of abysmal oblivion.

“Certainly it puts a damper on our plans,” as expressed by Jim Chen, vice president of regulatory affairs for Tesla Motors.

Rep. Richard Cunningham voted against the bill, claiming that it was tailor-made for Tesla and would have adversely affected existing dealerships, which have invested heavily in their businesses. Several other lawmakers indicated that it was too late for the bill to be considered this session and advised Coleman to come up with a solution next year, says the report.