Tesla Motors is pushing the state General Assembly to reintroduce a bill that would allow them to open showrooms in Connecticut after it failed to reach the state Senate for a final vote before the end of the 2015 legislative session.
The Connecticut House of Representatives passed a bill in May to permit Tesla Motors, a company that manufactures and distributes electric cars, to open three showrooms in Connecticut. But despite House approval by a margin of 116–32, the bill, HB 6682, was never voted on in the General Assembly because last-minute budget issues had to take precedent, state Rep. Angel Arce, D-Hartford, said. Government Relations Manager for Tesla Motors Will Nicholas said Tesla hopes next year — specifically around early February, when the legislative session begins — will be the year the company makes history. If HB 6682 is signed into law, he said, it will be the first time Connecticut law allows cars to circumvent automobile dealerships and be sold directly from the auto manufacturers.
“For 100 years, automobile sales have been from franchises associated with car companies and not through car companies themselves,” New Haven Economic Development Administrator Matthew Nemerson SOM ’81 said. “Tesla is trying to break that down.”
Nemerson said Tesla, which always sells its cars from its own showroom, considers the direct relationship between car manufacturers and consumers an integral part of its business model. Currently, Connecticut has only allowed Tesla to open a service center in Milford. Connecticut residents who want to purchase a Tesla car must travel to neighboring states Massachusetts, New Jersey or New York to find a Tesla showroom.
Nicholas said Connecticut has an ideal market for Tesla because residents have shown a strong interest in electric cars and Connecticut has invested in promoting electric vehicle technology.
Arce, who supported HB 6682 during the last legislative session, said Tesla’s proposal to enter the Connecticut market makes good business sense because the company already buys parts from three manufacturers in Connecticut.
“If it’s safe and it follows the rules and regulations of the state, I will support it,” he said.
But not everyone in Connecticut hopes to see the bill pass.
Licensed automobile dealers have voiced opposition to HB 6682, noting that the bill could create an incentive for other car companies to sell directly to Connecticut consumers, undermining the automobile-dealership business.
Nemerson said automobile dealerships benefit customers by protecting them from faulty products. Since automobile dealerships could go out of business if they sold defective products, they have a strong incentive to band together and only sell the best products car manufacturers produce.
“Dealers are the customers for the companies, and customers are the customers for the dealers,” he said.
Nemerson said Tesla and Connecticut’s automobile dealerships are in conflict because Tesla’s business model disrupts a century-old understanding between car dealers and manufacturers that each provide a separate but complementary service. He said Tesla operates under a new framework that renders a middleman between manufacturer and consumer obsolete.
“It’s a clash of American capitalistic cultures,” he said.
Still, Nicholas said Tesla’s entry to the Connecticut market is unlikely to negatively impact licensed dealerships. He said there has been no evidence of job loss or dealership closure in the other states where Tesla operates. In fact, he said, each new showroom that opens in Connecticut could create up to 25 new jobs and generate $7 million to $10 million for the state economy.
An earlier version of HB 6682 called for five new showrooms. But the Connecticut Automotive Retailers Association and Tesla Motors agreed to reduce this number to three in the revised bill.
Nicholas said he hopes to negotiate the number of showrooms that should open in Connecticut with the General Assembly during the next legislative session. Jim Fleming, president of the Connecticut Automotive Retailers Association, did not respond to requests for comment.
Tesla Motors currently has showrooms in 22 other states as well as Washington, D.C.