Ohio Auto Dealers Fight Tesla Over Sales Model
Ohio auto dealers are sparring with California-based automaker Tesla, which is selling its electric cars from two Ohio storefronts.
Ohio is among states proposing to block Tesla from setting up additional direct-sales galleries on grounds they undercut traditional auto dealerships. Last Tuesday, New Jersey officials approved a regulation effectively prohibiting automakers from going straight to customers. Tesla vice president Diarmuid O’Connell visited Ohio legislative leaders that same day to try to discourage them from passing similar restrictions.
"The bill would shut down our ability to grow in the Ohio market and, frankly, it’s just a first step to them shutting down our existing businesses," O’Connell said. "This is the pattern we see in other states."
The administration of Republican Gov. John Kasich, through the Bureau of Motor Vehicles, issued a license to Tesla authorizing the company to open its own stores in Cincinnati and Columbus.
Joe Cannon, a lobbyist for the Ohio Automobile Dealers Association, told lawmakers in testimony last week that the decision means Ohio’s longstanding licensing rules "have been thrown upside down."
The association filed unsuccessful legal action against Tesla’s two existing Ohio stores, so now is fighting for passage of a bill that would prevent Tesla from expanding to other locations.
Ohio dealers - with 830 dealerships, 50,000 employees and $2 billion in payroll annually - say their businesses can only prosper when the law separates manufacturers and dealers. They view the license Ohio granted to Tesla as opening a Pandora’s box.
"The BMV’s decision opens the door for all manufacturers - both emerging and existing - to follow the same path," Cannon told the Senate Finance Committee. "This decision has serious implications for both our dealers and consumers. From an industry perspective, our members have made substantial investments in their businesses, employees and communities across the state."