Tesla Motors Inc Direct Sales Strategy Sees A Setback In Georgia

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Tesla Motors is going through a rough time as far as its direct sales strategy is concerned. Recently Georgia auto dealers swayed legislators to freeze a bill that would have otherwise allowed the company to continue selling its vehicles directly, bypassing dealers, says a report from Matt Kempner of AJC.

Auto dealers succeeding again?

According to auto dealers in Georgia, Tesla Motors breaches state law by not using dealers. They add that the state’s dealer model safeguards consumers in other ways also, such as helping them deal with manufacturers recalls, says the report.

Chuck Martin, a Republican of Alpharetta, told AJC, “They want to kill the bill this year.” During the close of the session, Martin suggested that the possibility of bringing any change to the law is narrowing. He added that it is a terrible statement for the free market systems in Georgia.

Bill Morie, president of the Georgia Automobile Dealer Association, said he would like to spend some time to see how other states are dealing with Tesla and then talk to the bill’s supporters.

Tesla firm on its approach

House Bill 393 was voted on by a subcommittee of the House Motor Vehicles Committee on Wednesday. With this move, the opponents of the bill said they will get time to try to work out an agreement with supporters of the bill.

As per Georgian law, vehicle manufacturers are restricted from selling direct to consumers except for up to 150 custom-made vehicles per year. Tesla has largely adopted the strategy of selling cars directly to consumers, not giving in to the independent dealer model which is used by some of the biggest automobile dealers.

Tesla Motors has gone through similar tussles in other states where dealers are opposing the company’s business model. Tesla Vice President of Regulatory Affairs James Chen said the company is ready to talk, but it will not compromise on its agenda of getting legislation in favor of its business model. The executive said it is about consumer choice for Georgians, and the company will not give up.

On Wednesday, Tesla shares closed up 1.44% at $202.43.

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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 [email protected]

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