A bill has made its way through the Senate floor in North Carolina that could conceivably shut down business for Tesla Motors (NASDAQ:TSLA) in the state. The electric car maker relies on direct-to-consumer sales, which gives the company an advantage over manufacturers who must sell through a dealership.
The bill would essentially make it illegal for manufacturers to sell cars to consumers without using a licensed dealer. If signed into law, the new legislation would make Tesla unable to sell its cars in North Carolina, as it relies mostly on Internet orders from customers around the country. The company has sold eighty of its Model S sedans in the state, and has orders for sixty more.
The bill is backed by the North Carolina Automobile Dealers’ Association, which maintains that Tesla has an unfair advantage in its unique marketing model.
Robert Glaser, the association’s president, pointed out that car manufacturers have been barred from selling directly to consumers in North Carolina since the mid-1970′s. “This bill doesn’t change the law at all,” he said. “Somehow, they’ve been selling cars in North Carolina, you know, and I don’t know how it compares to that law.”
Instead, the bill would only redefine what a dealer is — and Tesla’s model is not included in that redefinition. “We believe that Tesla, like all the other auto dealers in the state, should get a license, appoint a dealer, fall under the protection of the Department of Motor Vehicles, and sell cars,” Glaser said. “We just want them to play by the same set of rules that the other 7,000 dealers in the state do.”