Tesla reaches deal to keep 5 N.Y. stores

Tesla is battling dealers state by state for the right to sell its cars directly to consumers. Ohio, New York, Maryland and other states have tried to block the company, and retailers in Texas successfully backed the nation's toughest restrictions.
TESLA V. DEALERS
TESLA V. DEALERS
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NEW YORK -- Tesla Motors Inc. and New York auto dealer lobbying groups reached an agreement that allows the electric-car maker to keep its five company-owned stores in the state, New York Gov. Andrew Cuomo said Friday.

“Today’s agreement reaffirms New York’s long-standing commitment to the dealer franchise system, while making sure New York remains a leader in spurring innovative businesses and encouraging zero emissions vehicle sales,” Cuomo said in the statement.

Legislation in New York will be introduced “in the near future” to implement the agreement, said Cuomo.

Mark Schienberg, president of the Greater New York Automobile Dealers Association, said dealers agreed to the compromise in part so that other provisions they are seeking in franchise legislation won’t get bogged down by the Tesla dispute.

He said Tesla’s five New York stores will be grandfathered in under the agreement, but the company won’t be allowed to open more stores.

The agreement, which is expected to be adopted as early as next week, will prevent other manufacturers from opening factory stores and will tighten up the language prohibiting factory stores in New York’s statute, Schienberg said.

“It was a very good dialogue, and I think this works out well for dealers and consumers and opens up opportunities for Tesla,” he told Automotive News.

Schienberg said he expects Tesla will eventually turn to the franchise system if and when it starts selling in large volumes.

“I don’t think this weakens the franchise system at all,” he said.

In 2012, the Greater New York Automobile Dealers Association sued Tesla and a state agency, charging that Tesla’s store licenses had been granted illegally. In 2013, the lawsuit was dismissed for lack of standing, and the association appealed.

Schienberg said Friday that he doesn’t know how the association will proceed on that appeal. Resolving the issue of standing is still important, he said, but the court could say the compromise makes it a moot point. “If that’s the case, we won’t pursue it,” he said.

The New York agreement comes less than two weeks after New Jersey Gov. Chris Christie barred Tesla from selling cars directly to consumers at its two stores in that state.

Tesla has said its locations at the Garden State Plaza in Paramus and the Mall at Short Hills in Millburn will become “galleries” on April 15, when the ban takes effect.

Tesla is battling dealers state by state for the right to sell its cars directly to consumers. Ohio, New York, Maryland and other states have tried to block the company, and retailers in Texas successfully backed the nation’s toughest restrictions.

Dealers have said Tesla’s model would set a precedent that could let other automakers sidestep the way independent franchisees have sold and serviced vehicles for eight decades. If Tesla succeeds in bypassing middlemen, some argue that future startups or entrants from China or elsewhere could sell directly to consumers or even create online retail outlets that sidestep dealers entirely.

Amy Wilson of Automotive News and Bloomberg contributed to this report.

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