Tesla Motors& cut out the middleman approach could spell …

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Tesla Motors’ cut out the middleman could spell trouble in Carolina

Tesla Model S

electric sedan goes on in Summer 2012.

RALEIGH, Tesla Motors is fighting a in North Carolina that effectively ban the company from its electric cars in the state, it against auto dealers who say the car has an unfair advantage selling to consumers online.

It’s the such battle for California-based which like other car must navigate a patchwork of laws dictating how its vehicles can be Nearly all states — 48 require manufacturers to sell vehicles through dealerships to the companies don’t undercut own network of franchised dealers, to the National Automobile Dealers

Tesla says it is cutting out the by allowing people to view options in a showroom, but then the car direct from the company rather than buying a salesman. That approach allows it to bypass state regarding franchised dealers, have been in place for However, lobbying groups say dealers invest more and provide customer service Tesla cannot.

The bill in North Carolina was routine, simply updating the law the relationship between automakers and But it also changes the law to subject sales to the same scrutiny. It has unanimously approved by the Senate; the is set to sit down with the state group for dealers, the North Automobile Dealers Association, to a compromise that both say is unlikely to be reached.

Tesla yet have a showroom in North where it has sold about 80 to date. The company recently the first quarterly profit in its history, around the same Consumer Reports gave its S electric sedan a near-perfect

Tesla currently operates 29 and galleries across 14 states and D.C. Customers can order a car at a sales location or at home but not at which exist purely to cars in states where dealers have launched or state law restricts the company discussing sales in person.

was the first state to take against the manufacturer’s stores, legislation in 2010 that their expansion. Since Minnesota lawmakers unsuccessfully for a similar measure. In New York and dealers have unsuccessfully to shut down the dealer’s

In Virginia, a judge recently Tesla’s request for an exception to that prevent manufacturers operating dealerships in most

But the automaker can sell in every because transactions legally place in California. The North law, however, prevents in the state from making purchases directly through said Diarmuid O’Connell, vice president of business

This would be the first to my knowledge that Internet-based with our company would be he said.

The argument from in North Carolina has mirrored from the national association and in states: franchise dealers more locally, showing to communities and customer service Tesla can’t match.

a consumer protection, said Bob president of the NCADA, and why we say that is a who has invested a significant amount of in a community is more committed to care of that area’s

Tesla has stepped up its advocacy in Carolina with a Web campaign and a showing of its Model S just the legislature. The demonstration drew their pages and passersby, who uniformly marveled at the touchscreen and sleek design of the car.

Ellie Kinnaird, D-Orange, the ingenuity of the car after watching it start up when she sat down, but she she doesn’t regret joining the 47 senators who voted unanimously for the

Dealerships are one of those basic that are the roots of a small she said. The model convinced me while this is visionary, the is it has to evolve to a local presence.

have suggested a compromise would allow Tesla a quota of direct sales going through franchised But that isn’t fair to manufacturers, said Sen. Tom R- Henderson and the bill’s sponsor.

You cut out a category for a brand new company you’ve got Kia, Hyundai they’re in here full — (but) Maserati, (and) Rolls-Royce? he said. have dealer presence in Carolina, and I know they don’t sell 80 cars.

Apodaca received a state-maximum in contributions from the 7,000-member in 2012. He noted steady from the industry date years, and he’s a top Republican a pro-business reputation.

Ferrari Electric Cars

Tesla that its time-intensive customer model won’t translate to franchise dealers and that consumers would laugh at the that they’re better by the existing system. O’Connell the dealers’ true interest is total control over

The bill was initially pitched as a way to consumers from online that don’t offer but we saw through that veil and the has emerged, he said.

Francine a University of Michigan economist who in franchising, said the laws in contributed to the collapse a decade ago of manufacturer Build-to-Order, whose Scott Painter, dreamed of cheap and customizable cars to consumers.

For someone who is kind of in and looking at business models, not obvious the car industry is so different, but the only industry retail-wise protected to this extent, she

Those laws are likely to in place, considering franchise account for about 20 percent of the base at the state level and millions a year lobbying at the level, Lafontaine said. has shown resiliency, but the company expect the roadblocks at the state to let up easily, she added.

I’m of pleased that Tesla has as far as it’s gotten, Lafontaine In some cases I guess because it’s electric. But will need that solution.

The company could try to for a federal law or a ruling from courts that would across the U.S. O’Connell That could include a case based on the Constitution’s Clause, which says Congress can regulate interstate

Courts have also that it forbids discriminating out-of-state companies.

Steve a professor of constitutional law at the John Law School, said such a could prove difficult. He to a 2001 decision in U.S. Court in a case involving and the state of Texas.

The court rejected Ford’s that the state’s law preventing the from selling used through its own website violated the Clause.

In this case, would have to prove Carolina’s law discriminates specifically the automaker, Schwinn said.

If it is, and enough at Tesla, and Tesla is an actor, and there’s evidence the legislature discriminated specifically them, then there’s a that the landscape might he said. That strikes me as a lot of

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