In the latest chapter in the seemingly never-ending saga between electric automaker Tesla Motors and powerful auto dealer associations across the U.S., Tesla Motors will officially open its second Store in Georgia tomorrow at a former Isuzu dealership in Decatur, just six miles from downtown Atlanta. Georgia, known for its generous
$7,500 $5,000 state incentive for electric car buyers, is the fastest-growing electric car market in the U.S. today.
It follows on from last month’s Tesla ban in the state of Michigan, where a change to dealer law eliminated a loophole that Tesla could have used to argue its case for owning and operating its own Tesla Stores.
At the same time, the Californian automaker is about to head to court to fight a petition filed against it by the Georgia Automobile Dealers Association at the state’s Office of Administrative Hearings. The allegation? That Tesla Motors [NASDAQ:TSLA] is making use of a loophole in Georgia automobile dealer law designed specifically for makers of low-volume, custom-built cars or zero-emission cars.
As PeachPundit details on its site alongside a Google Hangout with the Cato Institute, the Georgia Automobile Dealers Association filed the complaint back in August, claiming that Tesla had exceeded the number of cars allowed under O.C.G.A. §10-1-664.1(7). Georgia law strictly prohibits automakers from running dealerships and instead requires automakers to use franchised dealerships to sell their cars.
But under O.C.G.A. §10-1-664.1(7), automakers can sell direct to customers if their sales within the state total less than 150 cars, and if the cars themselves are made on a custom-built basis. Another exemption allows direct-sales for zero-emission vehicles, but again limits those sales to 150 vehicles per year.
GADA claims Tesla has sold more than that number from October through to June, and with a proposed legislation intended to raise that cap to 1500 vehicles per year failing to reach a vote before the end of the 2014 legislative session, is in violation of the law. Tesla says that it is not, and has sold less than 150 cars between January and October.
“There’s real demand for electric cars in Georgia,” Derrick Dickey, a spokesperson for GADA, told CNN Money back in September. “All we’re asking is that Tesla sell cars in compliance with the law.” Talking to the Atlanta Business Chronicle around the same time, Dickey had added that “Georgia must maintain the integrity of the proven current system which is supported by dealers and manufacturers. Local franchises ensure important consumer protections and provide the competition that drives down prices.”
“They would like us to be able to sell zero cars within Georgia,” Diarmuid O’Connell, Tesla’s VP of Corporate and Business Development told WABE Atlanta. “They are in the business of preserving a monopoly in the distribution of retail cars that they’ve enshrined, you know, in law over the course of time.”
Currently, while Tesla is happy to talk about the petition, GADA representatives cite pending legislation as a reason to not give official statements. But with Tesla looking to push on with the opening of its second Georgia Store as planned tomorrow, the battle is sure to intensify before it reaches a resolution.
As Peach Pundit contributor and senior writer at Freedomworks Jason Pye notes, while GADA says it wants Tesla to play by the ‘rules’ and Tesla says GADA wants Tesla to sell no cars within the state, the reality is something different.
Dealerships want a piece of Tesla’s business. They want to use the state to force Tesla into agreements to sell their cars. Though electronic vehicles and hybrids have been on the market for some time, sales associates at dealerships may not have the knowledge necessary to make a sale of any one of Tesla’s models. What’s more, they may be incentivized to steer prospective buyers to another vehicle from a different automaker. There’s also the middleman markup.
If you’re the sort who enjoys the occasional political blog, Jason’s post is worth a read, as is the google hangout below, even if you may find yourself disagreeing with some of his points.
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