Tesla sales model gets relief in North Carolina in surprise late-session bill

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A new North Carolina bill has the potential to turn Tesla’s luck around in the state, allowing it to operate its own dealerships.

North Carolina House Bill 617 was originally written in April to provide guidelines for temporary automotive sales permits for antique and specialty vehicles, but was reintroduced on Wednesday with a broader scope. The new writing of the bill largely does away with the antique vehicle scope and instead provides guidance for manufacturer-owned dealerships as long as they sell only electric vehicles or have no other traditional dealer franchises.

Tesla is not explicitly stated in the bill but the writing makes it clear that it was written with an intent to allow Tesla to sell its vehicles directly to consumers in North Carolina. Current regulations prohibit direct vehicle sales by manufacturers to consumers which protects the established dealer franchise model, but prevents competition from new business models like the direct sales model Tesla has established.

Tesla has been fighting with state regulators for more than four years over the right to sell vehicles directly to consumers in the state. The new bill promises to break the stalemate and bring new jobs and sales tax revenues into the state. Tesla VP Diarmuid O’Connell told senators that allowing Tesla to establish more dealerships in the state would bring $50 million of new investment and hundreds of new jobs to the state.

In the meantime, Tesla has already established one dealership in the state because there were no objections to the DMV application. A similar application for a license for a Tesla dealership in Charlotte last year when established auto dealerships in the area protested the application.

The new bill is not a landslide victory for Tesla as it comes with a cap of six sales locations in North Carolina, and it would not be able to sell vehicles from other manufacturers unless they were received as trade-ins. Given the relatively small size of the state, the six dealership cap should not be an issue though its arbitrary nature all but guarantees that Tesla will push back on the cap after securing a foothold in the state under the new regulation.

The bill is naturally receiving pushback from dealers and automotive dealer lobbying organizations. “We think it’s very important for consumer protection that the (dealership) system is in place,” General Counsel at NC Automobile Dealers Association John Policastro said. “The concept here is a limited exception.” The specific wording in the bill does make for a narrow fit but could easily be expanded with support of the NC Automobile Dealers Association.

The bill has not been voted on yet but is expected to be put up for a vote in the coming days.

Source: The News & Observer | WRAL