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.

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.

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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.