Tesla Motors Inc (NASDAQ:TSLA) has been battling auto dealerships in multiple states over its direct-to-consumer sales model. The company has won some and lost some, but this week, it added another win to its belt. According to Green Car Reports, Tesla defeated Ohio auto dealers in the state legislature on Tuesday.
Tesla fights for its sales model
At issue is Tesla’s decision not to use auto dealers and to sell its vehicles directly to consumers through its websites. Needless to say, this doesn’t sit well with auto dealerships, which see it as a threat to the way they do business. Ohio dealers pushed an amendment to a piece of legislation which would have prevented Tesla Motors Inc (NASDAQ:TSLA) from selling its vehicles directly to consumers in the state. However, lawmakers voted against that amendment, siding with Tesla.
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Lawmakers apparently moved up the vote on the amendment unexpectedly. It had been attached to an unrelated proposed bill which would have required drivers in Ohio to move into the left lane whenever there are highway maintenance vehicles along the road side. That bill was uncontroversial, so by attaching the amendment to it, auto dealers hoped to see Tesla banned from selling cars directly to Ohio consumers—simply by putting into place a safety measure for highway maintenance workers.
Tesla said the amendment would have hurt Ohio itself
Tesla Motors Inc (NASDAQ:TSLA) fought the amendment tooth and nail, just as it has in other states. The automaker has been proposing to build additional facilities in Ohio, and it noted that by banning its cars from being sold directly to consumers, the state economy could be affected. It wants to build in Cincinnati, Columbus and Dublin and provide 26 people with jobs as well as $7 million in “direct economic activity.” In addition, companies in Ohio supplied $10 million in components and parts to Tesla so far this year.
The automaker also brought in some of its Model S sedans to allow lawmakers to test-drive them recently. The Columbus Dispatch had photos of Ohio lawmakers climbing behind the wheel to test out the fancy car.
Shares of Tesla Motors Inc (NASDAQ:TSLA) declined in early trading this morning, falling more than 2% and continuing the volatility pattern we’ve seen recently. The NHTSA requested routine information about two of the recent Model S fires, and with such a positive result from the announcement about the positive investigation outcome in Germany, it’s unsurprising that shares would fall based on the NHTSA tidbit.