An Ohio Senate committee has approved a bill that formally bars carmakers from selling directly to consumers, with the exception of up to three outlets for Tesla Motors Inc. The measure represents a compromise between Tesla and the Ohio Automobile Dealers Association, which had sought to bar Tesla from implementing its direct sales system in the state, according to state Senator Scott Oelslager, the committee chairman.
Tesla operates two Ohio stores in Columbus and Cincinnati, and will be allowed to set up a third as long as the carmaker isn’t sold or acquired and doesn’t build anything other than EVs, according to the bill, which also bars the state from issuing a dealer’s license to an carmaker except for Tesla. The bill moves to the full Ohio Senate for consideration. Dealers have sought to obstruct direct-vehicle retailing in states including New Jersey and New York, claim that such sales model violates franchise laws.
On March 11, 2014, New Jersey’s Motor Vehicle Commission -- composed of members of Governor Chris Christie’s cabinet and others appointees -- voted unanimously to block Tesla from conducting direct sales in the state. The compromise in Ohio will enable Tesla to continue educating shoppers about its offerings in its retail stores, which the carmaker thinks is needed to promote the new technology, according to Diarmuid O’Connell, Tesla’s vice president of business development.
“One could always hope for more, but I think that this gives us a sufficient base from which to grow and to advance electric vehicles in Ohio,” O’Connell told Bloomberg in an interview. Traditional franchise dealers contested Tesla’s direct sales model because it might have other carmakers to follow suit, thereby jeopardizing investments in their dealerships, according to Tim Doran, president of the Ohio Automobile Dealers Association. “Nobody’s happy with the solution, but it is a reasonable solution that allows predictability into the future for the dealer model,” Doran told Bloomberg.