Tesla Motors’ stock has risen to record levels over the past three months. The disruptive electric car company has overcome its factory fire woes and has slowly begun creeping back into the spotlight as a reasonably viable fully electric car. Consumers have reported love of the ability to fully build and customize your vehicle online, and completely eliminating the unnecessary feature of going to a showroom and having to purchase your car from a salesman.

Tesla’s direct sales model means that there is no price gauging that would force the purchaser to shop around for the best deal. All models are priced exactly the same for every buyer. It’s been reported that some have taken so well to the concept, that they would never shop for a car the old way ever again. Which is exactly what Ohio dealerships are afraid of…
At the request of dealership owners, legislators in Ohio are trying to put the brakes, so to speak, on Tesla’s business in that state. Auto dealers have argued that the Ohio Bureau of Motor Vehicles violated a law requiring dealerships to have contracts with particular auto manufacturers when it allowed Tesla to sell cars there. The rule is Senate Bill 260 and would explicitly prohibit Bureau of Motor Vehicles from issuing dealer licenses to manufacturers.
Tesla, based in California, has two showrooms in Ohio where buyers can view and test their vehicles, but they then buy them online or over the phone. A third showroom, located in Northeastern Ohio has been put on hold while the company fights the challenges to its sales model. The cars have received fantastic reviews from auto industry experts, and cost upwards of $70,000.
Ohio Automobile Dealers Association President Tim Doran told lawmakers last week that the bill makes things fair amongst the other 830 dealerships in the state and prevents manufacturers from selling the same way that Tesla does, thus eliminating the middle-man of dealerships completely. Doran said Ohio dealers have made great investments in brick-and-mortar showrooms and employ more than 50,000 people. Doran said dealers are strong advocates for consumers and the current system ensures competitive pricing and vehicle servicing for consumers.
Vice President of regulatory affairs at Tesla Motors, James Chen, says that Doran’s concerns are unfounded, which is reasonable. Tesla sold roughly 300 cars in Ohio last year, which was barely a dent in Ohio’s total statewide auto sales for the year. Furthrmore the company is only making roughly 20,000 vehicles per year, versus the 15 — 17 million gas-powered vehicles per year. Chen additionally stated that dealerships have no incentive to sell electric cars because the pros of electric vehicles are the cons of traditional gas-powered vehicles, which make up a vast majority of dealership sales. Chen said Ohio franchise laws protect competition among dealers but exclude manufacturers like Tesla that don’t offer franchises.
This bill is merely the latest attempt of lawmakers trying to shut Tesla out of Ohio. Similar legislation has almost made it into past bills as well, including one last year. Lawmakers in Ohio concluded that the issue needed more analysis.
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