Tesla Motors has been restricted from executing its direct sales strategy in West Virginia, says a report from Automotive News. On Friday, Gov. Earl Ray Tomblin approved a bill that protects franchised auto dealers, naming them the only outlet where new vehicles can be purchased.
Tesla promises comeback next year
As per the new law, auto manufacturers cannot position themselves as a new car dealer or operate as a dealership. According to the West Virginia laws, an auto dealer includes but is not limited to “displaying a motor vehicle intended to facilitate the sale of new motor vehicles other than through franchised dealers.”
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In a statement, Tesla mentioned that the law was promoted as supporting businesses and free market principles, but in reality, it has only protected the monopoly of auto dealers. Jim Chen, Tesla’s associate general counsel, said the company will return next year to try again in the 2016 legislative session.
The company also suggested, “West Virginians deserve the right to choose how and from whom they purchase their vehicles. We will return next year to fight for consumer choice and free market access.”
Bill is not anti-Tesla
On the other hand, Ruth Lemmon, president of the West Virginia Automobiles & Truck Dealers Association, did not agree with Tesla’s claim that it is an anti-Tesla bill. She also said that West Virginia is neither rejecting the company’s technology nor its electric vehicles. According to the U.S.’s dealership lobby, their model is more beneficial for consumers by allowing them more say in pricing and encouraging local competition.
Various other states that have banned Tesla Motors’ direct sales strategy are Arizona, Texas and Maryland. In these locations, the company has established galleries for prospective customers to come and have a first look at the vehicle, but potential buyers cannot order, take test drives or discuss prices.
Even after facing resistance from states and auto dealers to go ahead with its sales model, Tesla Motors announced record deliveries of 10,030 units in 2015’s first quarter, outperforming projections to record a 55% growth rate over the previous year.