Tesla blocked in W.Va. as governor signs bill

West Virginia Gov. Earl Ray Tomblin today signed legislation that will effectively prevent Tesla Motors Inc. from selling cars in the strategically located state.

Debate over the measure lasted several weeks in the state Legislature. Senate President Bill Cole, a longtime auto dealer in West Virginia and Kentucky, supported the bill.

West Virginia, one of the smallest U.S. auto markets, would have given Tesla access to potential customers in bordering states Ohio, Pennsylvania, Virginia, Maryland and Kentucky. West Virginia’s eastern panhandle is considered part of the Washington, D.C., suburbs.

Tesla lobbyists visited West Virginia to amend a bill that was written to clarify responsibilities between automakers and their franchised dealers, Ruth Lemmon, president of the West Virginia Automobile & Truck Dealers Association, said in an e-mailed statement today, noting it was not an "anti-Tesla" bill.

"Tesla could better serve the consumers, the local communities and their product by becoming a true business partner to all concerned," she wrote.  "West Virginia would welcome (Tesla) to join the ranks of dealerships and play by the same rules and requirements and laws we must do."

After the state Senate had approved the original bill, Tesla proposed the amendment, which would have opened the door to Tesla stores.

While a similar bill was before the West Virginia House, “an amendment was made that was actually much broader than Tesla had proposed,” said Johnnie Brown, general counsel for the West Virginia dealers association.

The amendment proposed that any manufacturer could operate in the state as long as it has fewer than five stores. The House struck down the amendment and accepted the Senate version of the bill, which had no Tesla provision.

The final bill, sent to Tomblin last month, says a manufacturer may not “act in the capacity of a new motor vehicle dealer” or “operate a dealership, including, but not limited to, displaying a motor vehicle intended to facilitate the sale of new motor vehicles other than through franchised dealers, unless the display is part of an automobile trade show that more than two automobile manufacturers participate in.”

That statute eliminated the potential for Tesla sales.

Jim Chen, Tesla's associate general counsel, said the company was "disappointed" with the bill's passing. "West Virginians deserve the right to choose how and from whom they purchase their vehicles," he said. "We will return next year to fight for consumer choice and free market access in the 2016 legislate session."

West Virginia dealers, said Lemmon, “would welcome Tesla with open arms if they built facilities and staffed facilities.” West Virginia isn’t rejecting technology or electric vehicles, she added.

But “when you do not have competition, you develop monopolies,” Lemmon said. “I just can’t understand why if you want to be in the auto transportation business, why you wouldn’t want to be part of a proven model.”

Hannah Lutz contributed to this report.