Washington governor signs Tesla compromise bill

Washington state officially approved Tesla Motors Inc.’s direct-sales model last Thursday, when Gov. Jay Inslee signed a bill allowing the electric-vehicle maker to continue selling its cars through its own, factory-owned showrooms instead of franchised dealerships in the state.

The deal lets Tesla continue operations in the state and expand beyond its current two stores in Seattle and Bellevue.

Tesla, in a statement late Monday, said the legislation should serve as a “model solution” for other states where dealers have fought to constrain the automaker’s expansion efforts.

Patrick Jones, a spokesman for Tesla, said in an e-mail that the company “thanks Governor Inslee and the Washington State Legislature for supporting a culture of innovation and ultimately making the right decision for consumers.

Fair balance

The legislation “will allow Tesla to continue its mission of stimulating the market for electric vehicles by interacting directly with consumers,” Jones said.

Bryan Imai, senior general counsel at the Washington State Auto Dealer Association, said provisions on the bill ensure a fair balance between dealers and manufacturers.

The bill strengthens existing laws between automakers and state dealers, which prevent other automakers from selling directly to consumers.

“The bill clarifies that a manufacturer that held a dealership license as of Jan. 1, 2014, would be exempt from the prohibition on manufacturer ownership,” Imai said. Tesla held a dealership license in Washington as of Jan. 1 this year, he said.

The wording therefore would prevent other startup automakers from selling vehicles directly to consumers.

“I think the bill, as a whole, really impacts dealerships in a positive way,” Imai said.

The bill’s sponsor, Republican state Sen. Mike Hewitt, could not be reached for comment.

‘Up to each state’

The National Automobile Dealers Association, in an e-mailed statement, said that it believes that sales should be through independent, franchised new-car dealers.

“Some states allow automakers to sell directly, while others require dealers as an additional layer of accountability,” NADA said. “It is up to each state to decide whether Tesla or any manufacturer is complying with the laws regulating the sale of new cars and light trucks.”

It added, “Consumers are better served by multiple retailers competing for their business.”

Last month, New Jersey passed a regulation requiring new-car dealers to get franchise agreements in order to receive state sales licenses. Tesla appealed the state ban on direct sales last week.

You can reach Andrew Thurlow at athurlow@crain.com

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