Despite its proximity to the nation’s liberally-minded District of Columbia, the state of Maryland has historically held back on granting Tesla Motors [NASDAQ:TSLA] special dispensation to circumvent strict auto dealer law and sell direct to customer through mall-based Tesla Stores.
Under that law, Tesla, like any other automaker, would have been forced to sell its cars to customers via franchised, independently-owned dealerships.
A few days ago however, just hours before the end of the legislative session, the General Assembly of the state of Maryland reversed its prior ban on direct-to-customer sales, granting Tesla special dispensation to own and operate up to four official Tesla Stores and associated service centres within the state of Maryland.
Having passed through the legislative process, the bill is now on the desk of Maryland Governor Larry Hogan. If signed, it will take effect on October 1 this year.
While this isn’t the first time this year we’ve seen Tesla win the right to sell direct to customers in a U.S. state which had previously banned the practice, this latest success for the automaker is a particularly good example of how all parties can work together to reach an acceptable compromise.
In Maryland, unlike most of the other states where Tesla has battled lawmakers and prohibitions, the auto dealer association stood shoulder to shoulder with Tesla, supporting its right to sell direct to customers.
Working with state legislators and representatives from the state’s auto dealer association, Tesla — with support from the Maryland Automobile Dealer’s Association — had initially asked for dispensation under the Maryland legislature to own and operate six locations within the state. That proposal was opposed by fellow electric automaker General Motors, which had written to the state to argue that only two Tesla stores should be permitted.
With careful negotiations involving all parties however, that figure was compromised to four Tesla stores, something which seems to suit rival automakers, franchised auto dealers and Tesla Motors.
Since the law has not yet been signed into law, Tesla Motors must keep operating under existing statute, which requires it to operate so-called “Tesla Galleries” rather than stores until the new law comes into effect.
In a Tesla Gallery, staff may not discuss any aspect of ordering a Tesla electric car, nor may they direct customers to the Tesla Website in order to buy one. Discussing aftersales matters — like booking a service — is also strictly prohibited, and staff may only pass on general information about owning and driving an electric car.
With all parties having worked so hard to reach an acceptable compromise, it is expected that Governor Hogan will sign the bill into law in the next few days.
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