TESLA DIRECT-SALE PROPOSAL UNFAIR TO AUTO MANUFACTURERS
Decades ago, states across America passed a series of laws requiring the sale of motor vehicles through independent franchised car dealers, thereby making direct sale by manufacturers illegal.
As a result, today automakers are virtually the sole consumer product manufacturers in the nation forbidden from selling the very products they conceive, design and produce to their own customers. Sound fair? It is not.
Nonetheless, automakers built and invested in this mandated sales system that regulates every single aspect of the manufacturer-dealer relationship, right down to how much input a manufacturer can have over where and how its own products are marketed, displayed and sold.
There are aspects of the law governing the franchise relationship that add costs and inefficiencies; certainly pro-consumer systemic reforms are needed. But since all manufacturers are required to play by this same set of rules, no one automaker has a competitive advantage over any other. Until now.
Last month, the Connecticut General Assembly's Joint Committee on Transportation approved controversial company-specific legislation granting a lifetime exemption from franchised vehicle sales to a single manufacturer. That company is Tesla Motors. Now that is definitely not fair.
It is not fair when you consider that nothing in law precludes Tesla or anyone else from competing in the Connecticut market today like any other auto manufacturer competitor. Tesla simply does not want to play by the same distribution rules that everyone else is required by law to follow.
Luxury Teslas delivered to Connecticut customers start at $68,000, and Tesla sales prices can easily tally six figures. Tesla is a niche brand out of reach for most consumers in Connecticut, where the average new car manufacturer's suggested retail price is $31,770.
But Connecticut consumers who want to own a Tesla are able to buy them. Currently 1,133 Teslas are registered on Connecticut roads.
Despite its arguments to the contrary, Tesla is not unique. Of the 12 automaker members of the Auto Alliance, most sell premium models. Many offer electric or fuel cell powertrains at a variety of price points. And, every single one is incorporating astounding technological innovations into vehicles available to consumers today.
Good Connecticut neighbors, employers and corporate citizens would be harmed if the General Assembly were to approve this single company exemption. Our members include such iconic brands as Ford, General Motors and Toyota — all of whom have an employment presence in Connecticut. West Coast's Tesla? Not so much.
Alliance member companies greatly support the Connecticut economy, contributing millions of dollars in annual payroll and taxes. Manufacturers and their partners directly employ almost 6,500 Connecticut workers; dealers another 28,000-plus Connecticut residents. And, economic activity associated with our products accounts for $1.49 billion in tax revenue to the state of Connecticut each year.
This is not the first time this plea from Tesla has been presented to Connecticut legislators. And it has been rejected every single year prior. Now passed out of committee in this 2017 session, the bill moves to both the Connecticut House and Senate floors for their separate consideration.
Our hope is that legislators will continue to value our commitment to our customers and to the Connecticut communities we call home by voting for fair competition.
Our position is simple: All motor vehicle manufacturers should be required to follow the same set of product distribution rules as mandated by state law regardless of vehicle attributes, compilation and size of vehicle fleet, or timing of market entrance.
While many provisions of state franchise laws can be onerous to manufacturers, all market participants should have to compete equally on a level playing field under a single set of rules.
Amy Brink is vice president of state affairs for the Alliance of Automobile Manufacturers, the leading advocacy group for the auto industry.