Tesla sale strategy ban in New York averted

The Tesla Model S is introduced at the The Tesla Model S is introduced at the 2013 North American International Auto Show in Detroit. (Jan 15, 2013) Photo Credit: Getty Images

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New Yorks Assembly set aside a bill that Tesla Motors Inc., the maker of electric cars run by Elon Musk, had said would shut down its Empire State operations.

The lower chamber adjourned its legislative session late yesterday without acting on the measure. Lawmakers in the Assembly arent scheduled to reconvene until January.

The bill introduced in the legislature this month would have prevented car manufacturers from selling directly to consumers, as Tesla does. It also wouldve blocked registrations of new vehicles bought out of state. The Palo Alto, Calif.-based manufacturer said a ban on selling cars directly rather than through dealers would have forced it out of New York.

Teslas goal has been to catalyze the market for electric vehicles and selling through intermediaries at this stage of the company will not work, Diarmuid OConnell, a Tesla vice president, said June 21 in a statement while the bill was pending. It forestalls progress and defeats innovation.

Opposition to Teslas direct-sales business model has grown from auto dealers across the country. Since last year, lawsuits brought in New York and Massachusetts have sought to block the companys practice, while legislation to ban it also has been pursued in Texas. The company has operations in New York City and its northern suburbs.

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Tesla Exception

Senator Lee Zeldin, the Long Island Republican who sponsored the bill in the upper chamber, proposed a separate measure to carve out an exception for Tesla. Had both measures passed, the company wouldnt have been affected, he said.

Our goal is not to adversely impact any business operating in the state of New York, Zeldin said in an interview in Albany.

Teslas sales methods threaten to undermine an industry that employs 90,000 workers statewide, trade groups such as the Greater New York Automobile Dealers Association said yesterday in a letter to lawmakers.

Teslas investment in New York has been to rent store fronts in malls with a handful of employees, the letter said.

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