After running up against Utah laws, Tesla seeking ways to open shuttered dealership

AutoAssociated Press

Tesla Motors has built a new showroom in Salt Lake City to sell its sleek electric cars, but no one can buy, drive or discuss prices there after Utah officials ruled it violates state laws about car makers owning dealerships.

Jim Chen, the vice president of regulatory affairs for Tesla, said the company built the showroom in Salt Lake City after informal discussions with Utah regulators left the company with the belief it could be licensed to sell cars.

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Two weeks before their March opening, the Utah attorney general's office ruled that they couldn't sell cars under state laws barring a manufacturer from owning more than 45 percent of any dealership.

The Tesla facility now offers service for any Utah residents who've traveled to other states and bought the cars, but the company is indefinitely barred from selling cars and is still unsure if they can even display a Tesla inside, Chen said.

"We have not given up on Utah," Chen said. "We are continuing to pursue all possible avenues and all options to us are still on the table."

Utah lawmakers considered a bill earlier this year that would have allowed Tesla to sell its all-electric cars in the state, but the measure died in Mach.

Tesla representatives plan to meet on Thursday with Utah lawmakers and officials, including Gov. Gary Herbert's office, to talk about trying again.

Utah Rep. Kim Coleman, a West Jordan Republican who sponsored the bill earlier this year, said the governor has said he'd consider adding it to lawmakers' agenda if they meet for a special session this year. Herbert's office did not have immediate comment on the issue Tuesday.

Chen said Tesla won't use third-party dealerships because they're not only trying to persuade customers to buy an electric car, but in the process, convince them it's better than an internal combustion engine car. Chen said that would be a conflict of interest for dealerships relying heavily on sales of traditional vehicles.

"Until we can get electric vehicles into the mainstream, we still feel like we must do this on our own," Chen said.

Tesla has faced similar roadblocks to selling its cars in a number of states with dealership laws like Utah's. In some of those states, legislators have been looking at ways to tweak laws and let the company operate.

In late March, New Jersey Gov. Chris Christie signed legislation allowing Tesla to sell directly to customers, a proposal similar to a bill Utah lawmakers voted down earlier this year.

Coleman's bill would have created a special dealership license that would allow companies like Tesla to avoid using franchises and sell directly to customers online.

Utah's dealership laws stem from decades-old concerns that manufacturers could create monopolies over car sales, she said.

"We just really didn't see the Internet coming when we made these laws and now you have companies like Tesla that just do it differently," Coleman said.

Under her proposal, customers at Tesla's showroom could view a car and then order it online at a nearby computer.

State lawmakers cited concerns that the legislation was tailor-made for Tesla and the bill needed more study. It was voted down in March during the Legislature's final week.

Coleman said the bill ran up against steep opposition from existing Utah car dealers.

Craig Bickmore with the New Car Dealers of Utah told the Associated Press in an email Tuesday that he was not available to comment. Messages left with Wayne Jones of the Used Car Dealers Association were not immediately returned

Sarah Starkey, with the New Car Dealers Association and Utah's Larry H. Miller Dealerships, spoke against the bill during the session but through a spokeswoman, declined to comment to The Associated Press. Starkey told lawmakers in March that they'd love to see Tesla in Utah but they want them to follow the same laws other dealers and manufacturers are following.