Tesla Motors Inc To Remain Blocked From Selling Directly In Arizona

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A ban on Tesla Motors Inc (NASDAQ:TSLA) to sell cars through company-owned dealerships in Arizona will remain as it is, at least for a year, as the bill that was due for discussion in the state senate failed. As a side effect to this, Tesla might not consider establishing its Gigafactory in Arizona, a state that was in the running for the plant, says a report the Wall Street Journal.

Arizona may not get ‘gigafactory’

Sen. John McComish, a Republican whose district runs south of Phoenix, said that the failure of the proposal to let Tesla sell its Model S sedans through company-owned stores “doesn’t help our chances” to get the so-called “gigafactory” from Tesla Motors Inc (NASDAQ:TSLA). The factory could employ around 6,500 people.

McComish said that he is aware of the negotiations that are going on in various locations in Arizona. However, he did not have any information if the company is considering setting up a plant in the location. Other states being considered are Nevada, Texas and New Mexico.

He said that the passing of the bill on the floor of Senate was always dicey, and now with the failure the chances of setting up a plant have minimized. The bill will not be passed this session, according to McComish. This implies that everyone will have to wait until next year before new legislation could be debated.

PR firm from Tesla worked hard to sell the idea

Bobbi Sparrow, the president of the Arizona Auto Dealers Association, said that the fact that Arizona may lose an opportunity of investment did not affect the legislators. She added that the PR firm of Tesla Motors Inc (NASDAQ:TSLA) was campaigning and trying to establish the fact of state losing an investment opportunity if the bill doesn’t pass. However, the legislators did not consider it.

Only last month, the electronic vehicle manufacturer was at the receiving end of action by the State Motor Vehicle Commission in New Jersey, when it rescinded Tesla’s dealership license.

As a result, Tesla Motors Inc (NASDAQ:TSLA) converted its agencies into galleries, where cars can be displayed, but cannot be sold or marketed. In Arizona, Texas and New Jersey, cars can only be sold through franchise dealerships as per the law.

“We’re continuing our state-by-state fight, and we are encouraged that there are legislators around the country that understand our business model,” said James Chen, vice president of regulatory affairs for Tesla Motors Inc (NASDAQ:TSLA).



About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com