The electric car company Tesla would be allowed to operate its own dealerships under a bill that was introduced Wednesday in a Senate committee.
Current state law bans auto manufacturers from owning their own dealerships, a law that protects traditional local car dealers.
Until Wednesday, House Bill 617 addressed regulations for antique car sales, but the Senate Commerce Committee stripped out that legislation and replaced it with the Tesla bill, which hadn’t previously received a hearing.
The bill doesn’t specifically mention Tesla, but it limits manufacturer-owned dealerships to electric vehicle sales and manufacturers that don’t have any traditional dealer franchises. They could only sell used vehicles they acquired as trade-ins, and the companies would be limited to six locations.
Tesla already has a dealership in Raleigh – the only one in the state – because no one objected when the company applied to the DMV for the permit. The DMV rejected a permit application for a Tesla dealership last year in Charlotte after other dealers complained.
Tesla vice president Diarmuid O’Connell told senators that allowing more of his company’s dealerships would create $50 million of investment and hundreds of jobs in North Carolina. He argued that selling directly to drivers is the “best, and perhaps the only way” to market electric cars.
Tesla sales have been a controversial subject for years, as other automakers and dealers object to the unusual business model. Lobbyists for Honda and the Alliance of Automobile Manufacturers spoke out against the bill Wednesday. They said their organizations only recently found out about the bill.
“My clients also sell electric vehicles” but the bill doesn’t give them similar sales options, said Henry Jones of the Alliance of Automobile Manufacturers. “We should not be picking winners and losers here.”
But the bill has support from the N.C. Automobile Dealers Association, which views it as a compromise.
“We think it’s very important for consumer protection that the (dealership) system is in place,” lobbyist John Policastro said. “The concept here is a limited exception.”
The bill gives auto dealer associations expanded legal powers to challenge potential violations of manufacturers’ licensing laws – a provision the manufacturers oppose.
“It is a dramatic expansion in the law,” Honda lobbyist Davis Horne said. “We don’t object to the Tesla settlement in principle, but this bill goes far beyond that.”
The Senate committee didn’t vote on the bill Wednesday but plans to in the coming days. Because the bill is a stripped-out version of a House bill, it will go directly to the House floor if it passes the Senate.