Automakers are fighting Pennsylvania legislation that would allow electric-vehicle maker Tesla Motors to operate an unlimited number of factory-owned stores in that state.
The Alliance of Automobile Manufacturers says the legislation, introduced Monday, creates an uneven playing field because it doesn’t cap the number of allowed sales outlets or the volume of vehicles that could be sold directly.
“It really gives them an advantage in the marketplace,” said Gloria Bergquist, vice president of communications and public affairs for the alliance, a Washington trade association representing 12 vehicle manufacturers. “We really believe a cap is needed to maintain a competitive industry.”
Without a very narrow restriction on either the number of showrooms or number of vehicles sold, any exemption to direct factory sales made for Tesla should be available to all manufacturers, Bergquist said. Tesla is not a member of the alliance.
No longer neutral
The alliance had not previously objected to compromises reached between dealers and Tesla in such states as Ohio and New York because those compromises included caps on the number of vehicles sold or the number of outlets allowed. But now the Pennsylvania bill has pushed the traditional automakers out of their position of neutrality on the subject, Bergquist said.
John Devlin, president of the Pennsylvania Automotive Association, which represents dealers in that state, says the association is supporting the legislation in order to clear up ambiguity over whether Tesla’s direct-sales model is legal in the state. The proposal is similar to the compromises struck in other states, even without a cap, he said.
Agreed to disagree
“We’ve talked” to the alliance, Devlin said, “and I guess we’ve agreed to disagree on this.”
After seeing the tide of public and political opinion favor Tesla in other states, Pennsylvania association leaders agreed it would be best to provide an exemption for Tesla in order to preserve overall franchise protections. Association leaders believe the current statute already prohibits direct factory sales, Devlin said, but Tesla was able to open a store in King of Prussia, Pa., and is planning a second location in Devon, Pa.
The proposed legislation would make the restrictions on factory-owned dealerships stronger in case another manufacturer tried to challenge it down the road, he said.
“Where we’re drawing the line in the sand is with the manufacturers who have a franchise system,” Devlin said. “The reason we’re doing this is really to preserve the franchise system.”
Tesla officials declined to comment on the Pennsylvania bill.