For the first time Friday, Connecticut lawmakers heard some of the pros and cons of a proposal to allow Tesla Motors to operate non-franchised dealerships in the state.
Tesla Motors manufactures electric cars that don’t require the same maintenance as traditional automobiles with internal combustion engines. They also use a different business model than other auto companies. The company operates in more than 20 states and owns each of the stores where it sells cars directly to consumers.
During a public hearing Friday, Tesla Motors told lawmakers why its business model should be given a chance in Connecticut, while auto dealers in the state explained why the proposal shouldn’t be allowed to shift into drive.
“We are looking for the opportunity to apply for and receive a dealer license subject to the same regulations as any other dealer,” said Jim Chen, Tesla’s vice president of regulatory affairs. “We’re getting shut out from that.”
Chen contends that the company is not looking for any kind of carve-out from state laws that govern franchises and consumer protection. He maintains that the company merely wants to be able to sell its cars just like any other manufacturer.
Connecticut has nearly 300 auto dealers that employ about 14,000 people, according to the Connecticut Automotive Retailers Association, the group staunchly opposed to allowing Tesla's direct sales.
Jim Fleming, the group’s chief, said his organization supports allowing Tesla to exist in Connecticut within the existing franchise model.
Fleming and the dealers argue that, in the event Tesla goes under, the franchises are there to protect consumers from being scammed or owning a car that can’t get serviced.
“It’s going to provide greater consumer protection to do it under laws, consumer protection laws, that have been on the books for nearly 40 years,” Fleming said.
Dealer owners aren’t shy about their intentions either. They see the huge dollar signs associated with Tesla and want to make profits on the cars that start at $70,000, but average purchasers spend upwards of $100,000.
“We have a whole portfolio of client base that would be very much the right fit for a Tesla and we feel the franchise system is a very efficient way of selling and servicing these cars,” said Jeff Aisola, who owns Carriage House Mercedes-Benz in New London.
Lawmakers appeared to be in the mood to compromise after hearing hours of testimony from the auto maker, Tesla owners and opponents.
State Rep. Tony Guerrera used the word “compromise” several times during the hearing where Tesla said it intended to open four or five stores.
On the changing automotive sales industry Guerrera said, “We have to try to be a little bit more pro-business in regards to getting more business to come in but with that said we have to be cautious that we don’t infringe on other companies also.”
Chen said dealers need to look at the electric car manufacturer in a different way than traditional manufacturers and dealers.
“We are not competing on an intra-brand basis. So we’re not going to be selling Fords, or GMs, or Hondas or Toyotas,” Chen said.
A vote on the proposed Tesla sales measure could be held next month.