In Washington state, Tesla finds way to share the road with dealers

Fri Mar 21, 2014 3:13pm EDT
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By Andy Sullivan

(Reuters) - On President's Day last month, about 40 electric-car advocates gathered under the rotunda of the state capitol in Olympia, Washington, where a lobbyist for Tesla Motors Inc urged them to rally against a bill that would prevent the carmaker from opening new sales offices in the state.

By the time the legislature finished its work last week, a coalition of environmentally friendly Democrats and free-market Republicans had stripped the restrictions from the bill. Tesla TSLA.O would be free to sell its cars through its own sleek showrooms rather than relying on the dealer networks that have dominated the industry for decades.

It was a welcome win for Tesla after setbacks in Arizona, New Jersey and Texas, where state officials have blocked the startup from selling directly to consumers. But auto dealers were happy with the outcome as well, because the bill carved an exception for Tesla while strengthening rules that require other automakers to sell through their stores.

The outcome in Washington, which must still approved by the governor, shows that the battle between the Silicon Valley startup and Main Street dealers, currently playing out in states like New York and Ohio, isn't necessarily a zero-sum game.

Where there is a ban, Tesla can show off its cars in "galleries" and sell them online. And dealers may be able to co-exist with Tesla in states where it sells directly, so long as bigger players don't try to follow its lead.

"Our issue is not with Tesla itself, it's with the model," said Tammy Darvish, a vice president at Darcars Automotive Group in Silver Spring, Maryland who bought a Tesla of her own. "How can we as auto dealers compete with manufacturers in the same market when we are completely dependent upon them for our inventories?"


The clash pits a billionaire engineer, Elon Musk, against 17,000 businesses, often family-owned, which are engines of their local economies, and which made substantial investments based on ground rules that require automakers work with dealers, not compete against them.   Continued...

A Tesla Model S electric car is shown for sale at a Tesla store in a shopping mall in La Jolla, California September 6, 2013. REUTERS/Mike Blake