It was a rather exciting week for the automotive industry with the release of the new Ford (NYSE:F) Mustang, but a smaller story that has been brewing for some time met a crucial development this past Wednesday.
Tesla Motors (NASDAQ:TSLA) has, without much doubt, been the most disruptive force in the automotive industry in a long, long time. Few companies have put the large incumbent leaders on such a careful watch, as its vehicle — the Model S sedan — continues to blow critics away and the customer satisfaction ratings soar through the roof. However, the car itself is only a part of the story.
The other major shift that Tesla is bringing to the table is its direct-to-consumer sales approach. Rather than follow the dealer model, Tesla has opted to cut out the middleman — essentially what Apple (NASDAQ:AAPL) did with the electronics industry — and market its wares directly to the consumer via the Internet, and company-owned retail locations.
Naturally, this upset a number of dealer organizations, as existing automakers — bound by antiquated state laws — must go through the conventional dealer model to peddle their vehicles to the public. In certain states, a lot of money has been thrown around by these dealers to ensure that Tesla’s business model is made illegal, and to force them into the confines of the auto dealership mould. Ohio is one of these states.
The fight between Tesla and the Ohio Auto Dealers Association has been growing increasingly fierce after a proposed amendment to an Ohio road-maintenance worker safety bill (affectionately known as Senate Bill 137) threatened to ban Tesla stores in Ohio outright. Tesla hurriedly rallied the troops, urging its followers to email their representatives, and on Tuesday, the bill passed unanimously without the Tesla ban included.
“The amendment was added to SB 137 at the last minute, and the bill originally was to be voted on [Wednesday],” Autoblog explains. “But Tesla wrote e-mails to its advocates on Monday asking for help to fight the inclusion of the amendment, and the vote was quietly moved to Tuesday.”
“I’ve watched amendments go through at the last minute and making mistakes.” Representative Rex Damschroder, a Republican from Fremont, told the Columbus Dispatch. “This issue is of such importance that it shouldn’t be rushed,” the Dispatch reported.
Representative Robert F. Hagan, a Democrat from Youngstown, put in his two cents as well. “Are we standing in the way of something that is innovative?” Hagan further stated that, ”This is an up-and-coming, 6,000-employee group that should be given an opportunity to expand.”
While its still legal for them to do so, Tesla will be opening its first Ohio in Easton on Friday, and in a week, another store in Cincinnati. Further down the road, Ohio Tesla might be a boon for the state, as well. ”[Tesla] might have future potential in Ohio – they are looking for somewhere to build their pick-up trucks,” the Dispatch quoted Damschroder as saying.