Tesla direct sales bill moves forward in Arizona

An Arizona Senate committee has pushed forward a bill that would let electric-vehicle maker Tesla Motors Inc. sell its cars directly to consumers.

The measure, approved on a 3-2 vote Wednesday by the Senate Commerce, Energy and Military Committee, requires Tesla to have a service center in the state to handle repairs and warranty issues, the Associated Press reported. The bill next goes to another committee for review, then to the full Senate. It was unclear when the next action would take place.

Arizona Senate Majority Leader John McComish called the bill a “pre-emptive strike” against future laws that outlaw Tesla’s direct-sale model.

“What has happened … is that in some states, they are moving to outlaw that kind of operation,” McComish told the Associated Press. “But I think we should be about opportunities for innovation rather than stifling innovation.”

A Tesla spokeswoman wrote in a statement: “We’re pleased with efforts in the Arizona Legislature that could enable customers to purchase electric vehicles directly from Tesla and other EV manufacturers in the state and appreciate the strong signal of support for American innovation. We look forward to working with both the Senate and Assembly to pass this legislation in support of the free market in Arizona.”

The measure was introduced in January in the Arizona House, according to a blog posted on Phoenix New Times, and was passed as a bill that “absolutely had nothing to do with cars at all.” Now, because of Arizona’s strike-anything amendment that allows the text of a bill to be substituted with new language, the measure is being revived in the state Senate as a pro-Tesla bill.

Tesla is pushing for approval of its direct-sale model in many states, and has drawn opposition from auto dealers and associations that represent them.

New Jersey last week moved to block Tesla’s direct-sale model in that state. The New Jersey Motor Vehicle Commission, with members appointed by Gov. Chris Christie, voted unanimously to bar any form of direct automotive sales in the Garden State.

But recently Arizona was named one of the leading contenders for Tesla’s planned gigafactory to make lithium ion batteries. Of the four states Tesla is considering for the factory -- Arizona, Nevada, New Mexico and Texas -- two of them, Texas and Arizona, ban direct vehicle sales to consumers.

State Rep. Warren Petersen (R-Gilbert), the bill's original sponsor, called the measure a “great opportunity ... to send a message that we welcome business and we welcome Tesla here to Arizona.”

All nine of Arizona’s U.S. Representatives sent Tesla CEO Elon Musk a letter Tuesday asking the automaker to open its new factory in their state, The Arizona Republic reported.

In a report by the Arizona Daily Star, a Tesla lobbyist is quoted as saying, “Arizona is very much in the mix [for the factory]. However, having said that, I don’t want anybody to think there is any kind of quid pro quo here, that if you vote for this you’re guaranteeing this, or that if you vote against this you’re guaranteeing that.”

Tesla has said the factory is estimated to cost about $5 billion and ultimately employ about 6,500 people.

You can reach Andrew Thurlow at athurlow@crain.com

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