Earlier this month, the North Carolina state Senate passed a law effectively banning California-based automaker Tesla from selling cars in the state. The bill is now in the House and Tesla is hoping it won’t go through.
Tesla’s Groundbreaking Sedan and Sales Methods
The Tesla Model S, a premium electric sedan following on from the company’s earlier electric sports model Roadster, has received high praise. In addition to being named the Motor Trend Car of the Year, it also scored an outstanding 99/100 in Consumer Report tests. Drivers seem to love the car, but it has also been a source of recent trouble for the company.
Eschewing the traditional method of selling via car dealerships, Tesla has set up 37 showrooms around the U.S. with cars for display and test-driving. The electric car manufacturer believes that traditional dealerships aren’t a good fit for them at the present time. Electric cars are still relatively new, and buyers will need more information than they would on a gasoline car.
This new method is not welcome everywhere, apparently.
North Carolina Joins Texas and Other States
The bill passed by the Senate in North Carolina prevents automakers from selling cards directly without a licensed dealer.
The bill was supported by the North Carolina Automobile Dealers’ Association. The bill doesn’t target Tesla directly; President Robert Glaser said it simply redefined who qualifies as a dealer. Auto manufacturers haven’t been able to sell cars directly to drivers in North Carolina since the mid-1970s.
North Carolina is only the latest state to address the issue of Tesla’s unconventional sales strategy. Texas doesn’t allow the sale of a Tesla car in the state, and if someone orders it online, a third party must deliver it. Tesla is unable to open showrooms in Colorado and Virginia. Other measures in Minnesota, Massachusetts, and New York have failed.
Making the Dream of the Electric Car Come True?
Tesla has found success in the difficult electric car market. The Nissan Leaf and the Chevrolet Volt have shown disappointing sales. The country is nowhere close to reaching President Obama’s dream of seeing one million electric cars on the road by 2015. At this point, only about 50,000 cars sold are electric.
But that could be changing. Tesla’s sales have been strong and the company posted a quarterly profit – its first – of $11.2 million. Part of their income came from selling credits to other automakers. These automakers, including Honda, are worried they may not meet certain environmental regulations and are buying credits to avoid penalties.
The company paid back the balance of its 2010 taxpayer loan, approximately half a billion dollars, to the federal government Wednesday – nine years ahead of schedule.
What’s Next
Sales of the Model S have been low in North Carolina and if the bill does pass in the House, it’s unlikely to have an adverse economic effect on the company. Whether this is the last bill of its kind, or whether even more states will follow suit, remains to be seen.
