Tesla Motors Inc Faces New Legal Challenge In New York

Tesla Motors Inc (NASDAQ:TSLA) is facing another legal challenge in New York. New legislation has been proposed in the state legislature that appears like it is in intended to prevent the electric car manufacturer from selling its vehicles directly to consumers.

Tesla Motors Inc Faces New Legal Challenge In New York

The automobile dealers association in New York is pushing the bill.  Last November, some of the representatives of the association including Deborah Dorman, president of the Eastern New York Coalition of Auto Dealer met with Governor Andrew Cuomo to seek his support for the legislation. The governor agreed to sign the bill if the lawmakers in the state pass the bill, according to his aides.

Environmentalists oppose bill

Some environmentalists suggested that the bill unfairly targets electric car manufacturers. Mark Ruffalo, an actor active in state environmental politics, is against the proposed bill and encouraged his 660,000 followers on Twitter Inc (NYSE:TWTR) to oppose it.

According to him the legislation would restrict the sale of environmentally friendly electric cars. He pointed out that the bill unfairly singled out the green car industry.

Bill does not target Tesla, supposedly

According to Dorman, the proposed bill does not target Tesla Motors Inc (NASDAQ:TSLA). It was designed to protect consumers as it requires manufacturers to establish a store in New York.

Dorman refuted the claims against the bill. She said, “Everyone is selling electric cars, it has nothing to do with that. If you allow someone to come into the market with no overhead, that’s an unfair advantage.”

She emphasized that manufacturers are already prohibited from directly selling cars to consumers in New York. According to her, Tesla Motors Inc (NASDAQ:TSLA) managed to evade the law by creating subsidiaries to be able to sell its electric cars in the state. She pointed out that the electric car manufacturer has an unfair advantage over other automakers that are required to sell cars through dealers.

Early this month, similar legislation was proposed in the State of Washington, which could prevent Tesla Motors Inc (NASDAQ:TSLA) from expanding its current stores in the state. Under the proposed bill, the Department of Licensing in the state of Washington cannot issue additional licenses for the electric car manufacturer to open and operate new stores and service centers.

Last December, the auto dealers in Ohio filed a lawsuit against Tesla Motors Inc (NASDAQ:TSLA) alleging that the electric manufacturer’s sales model violates the law in the state.

  • Wulfher

    NADA should just die. To claim that Tesla should be punished because it has a much lower overhead is just outrageous. I will never again buy from a dealer, why should I waste my money on a middleman?

  • Russell.L

    “If you allow someone to come into the market with no overhead, that’s an unfair advantage.”

    This statements makes sense if you were a franchised GM dealer competing with another franchised GM dealer that has no overhead.

    But Tesla has no franchised dealers and is footing the bill for all of their showrooms and service centers.

  • Brian V

    Don’t get me wrong. I like Tesla and glad that Elon decided to build factory here in the US. I just can’t understand why democrats keep screaming for that “manufacturing job back to America” type of thing. Here is a simple fact: a “manufacture job” at Nike in Vietnam gets $720 a year, while a “manufacturing job” at Nike in the US got an annual salary of $45,000 on average (long time ago before Nike moved all the production lines to China, then moved again to southeast Asia). Nike currently has 53,000 such “manufacturing jobs”. Can you democrats see why they don’t bring those jobs back to the states? You get paid because you create value. Do you really believe the Nike shoes we used to make here is 60 times more valuable than those made by Vietnamese?

  • JonF

    Even if they get locked out of 49 of the 50 states… as long as they maintain that ONE state, they will be fine. Why? because they will just “claim” you are buying the car from that one state and then having it shipped into your state. The state you are moving it to doesn’t care as long as you pay the sales tax. They are already getting around this in most all of the states they have been blocked.

    If they try to step in and affect the interstate commerce (shipping a car from one state to another), it will end up pushing it to the federal level, and I don’t think the dealers want to move this into the federal level…

  • Richard Selby

    The corrupt communist states of the Northeast led by the greedy rusty automobile dealers… why don’t you all move to Russia… you will be welcome there.. let Tesla be free to sell cars and compete!

  • Rob Behler

    I hope they pass the bill p[roving yet again the stupidity of the Democratic machine. New Yorkers will drive to Jersey or Pennsylvania to get their Teslas.

  • John Edwards

    For some reason I can’t get a quote I read 50+ years ago from the then President of GM who declared:
    “Every year’s automobile should be designed in such a manner as to create a sense of dissatisfaction in the mind of the consumer with the preceding year’s model so as to ensure continuing demand.”,
    The quote came from a book written by Vance Packard. Its title was “The Waste Makers”.

    It’s important to be careful about the things you wish for. They might come true.

  • maifriend

    No overhead? It costs money to build stores, service centers and people to operate them. Wait until buyers cross the border of the neighboring state (i.e. Oregon) to buy their Tesla.

  • xdir

    So much for free market capitalism.

  • Larene Depopiet

    “If you allow someone to come into the market with no overhead, that’s an unfair advantage.”
    Nice to see that they admit that dealers are overhead, and that they do not add value. Otherwise, if dealers added value commensurate with their cost, selling directly would not be an advantage. It makes perfect sense that they would do anything to protect their racket. It makes perfect sense that they should be eliminated by the market.

  • Jake Sorensen

    Dear traditional car dealers, zombies, and other walking-dead entities, it’s over, evolve or die, no one wants your retrograde products, and electric will eventually overtake gasoline powered cars. Incidentally, Tesla is now building capital to bring thousands of jobs to the US through car and battery manufacturing, so, you know, people who might actually buy a crappy Ford or Chrysler will have the cash to because they’ll have those things that America used to have, you might not remember them, they were called “manufacturing jobs”. Way to act in a short sighted and egoistic interest that will harm you in the long run. Imbeciles. Let’s hope New York like Washington sees this cynical anti-competitive nonsense for what it is, and consumers should find out who this “association of car dealers” is and boycott them.