Lawmakers to raise bill that could bypass car dealers for Connecticut sales of Tesla cars

Economic Indicators Associated Press

Connecticut is the latest state to consider allowing Tesla Motors to sell its electric cars directly to consumers, bypassing the traditional system of franchised dealerships that are often family-owned businesses.

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Rep. Tony Guerrera, a Democratic co-chairman of the Legislature's Transportation Committee, told The Associated Press on Tuesday that his panel will raise a bill Wednesday for a future public hearing. He said details of the legislation still need to be ironed out.

"I think it's something we need to talk about and have a conversation about it, and have experts tell us why it's good and why it's not good," Guerrera said, adding that the American-made electric vehicle is growing in popularity among consumers.

State law in Connecticut and many other states prevents a vehicle manufacturer from also being a retailer. Tesla has been denied a state dealership license in Connecticut but was allowed to open a repair facility in Milford.

Tesla currently has stores in about 20 states. In recent years, state legislators across the country have debated whether to change laws similar to Connecticut's to allow Tesla to bypass auto dealers and sell directly to consumers.

Last year, Pennsylvania Gov. Tom Corbett signed legislation allowing Tesla to open five dealerships. But in Michigan, Gov. Rick Snyder last year signed a law clarifying that automakers can only sell through franchised dealerships.

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In neighboring Massachusetts, the state's highest court last year threw out a lawsuit aimed at blocking Tesla from selling its cars directly to consumers. The suit was filed by the Massachusetts State Automobile Dealers Association, citing a state law designed to block car dealers from abuses by car manufacturers.

Tesla is now selling cars at a mall in Natick, Massachusetts. A base Tesla model starts at about $70,000.

James Chen, vice president for regulatory affairs at Tesla, contends the car company is not trying to upend the dealership system.

"This is Tesla trying to introduce new technology, frankly what we believe to be a superior technology," Chen said. "The dealers should be embracing the idea of an American company trying to come in."

State Sen. Art Linares, a Republican from Westbrook, started the push to change Connecticut's law. When shopping for a Tesla last year, Linares said he was surprised that he had to travel to White Plains, New York, to test drive a car and make a purchase. His new vehicle is scheduled to arrive in February.

"I think that Tesla is an innovative business. They're creating jobs across the country. It's a great vehicle," said Linares, who contacted the company about proposing legislation in Connecticut. "Just by passing this bill, we can create jobs here in Connecticut."

James Fleming, president of the Connecticut Automotive Retailers Association, said he believes it's ultimately better for Tesla and consumers to work with the current system of franchise dealerships, which are mostly family-owned in Connecticut.

He contends dealerships are advocates for consumers, giving the example of when Saab Automobile filed for bankruptcy protection. He said it was ultimately the dealers who ensured customers' warranties were still honored and repairs made.

"There's a real danger in allowing an exception for what I think is a cool car, but nevertheless, consumers are going to lose under that scenario if something happens to that company," Fleming said. "When the corporate store goes away, because you own the entire distribution, there's no one here to take care of those customers."

Chen called it "almost laughable" that dealers are pitching themselves as the consumer's advocate, saying there's no guarantee they will remain in business. He said Tesla is "far from bankrupt" and the California company receives exceedingly strong consumer satisfaction ratings from its customers. Last year, the company planned to build 33,000 vehicles.

"This is the dealers doing nothing more than trying to protect their monopoly," Chen said.