NYS Exposed: State law prevents Tesla from upstate expansion

February 13, 2018 08:06 AM

New York State is spending millions of your tax dollars installing electric car charging stations, yet state law doesn’t allow certain electric car makers like Tesla to sell their vehicles upstate.  

Currently, if someone living in Rochester wants to speak with a Tesla representative before buying a car, he or she has to go to New York City, Cleveland or Pittsburgh to do it. Tesla is having trouble expanding in New York because it sells direct to consumers and NYS law requires that car sales go through auto dealers.  

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“That's a system that was setup many years ago to protect consumers because it allowed for service of vehicles, recalls, those kinds of things.  In the modern world the question of whether you can still achieve those goals is something we're exploring,” said New York State Assembly Majority Leader Joe Morelle, who has introduced legislation that if approved, would allow for the expansion.    

The State Legislature began “exploring” it nearly four years ago when it allowed Tesla to operate a handful of sales locations, all are downstate. The company now wants to build 15 new stores, including 5 upstate and one in Rochester, but it’s getting push back. 

“They’re trying to operate on a different set of rules and this came up a couple of years ago, and so legislation was negotiated so that they could do four stores but part of those negotiations were,” said Assembly Minority Leader Brian Kolb. “That's it, and here they are back trying for more stores.”

The Rochester Automobile Dealers Association said if Tesla wants to expand upstate, it should partner with dealerships and allow the dealers to sell Tesla cars to consumers.  

“It's easy to go out there and sell a car,” said Brad McAreavy, President of the Association. “What's difficult is to be there through the whole ownership cycle of the car. Through the service, the collision, be there through the trade-in, be there to arrange all the different things that go with the vehicle. We've seen car companies come and go and we know the problem with them leaving is there's still customers out there.” 

Tesla doesn’t want partners though. It sells its own cars, usually in small showrooms. Prices are non-negotiable and its push to expand upstate goes hand-in-hand with the release of its most affordable car yet, the Model 3, which is $35,000.  

“The location that we'd like to build in Rochester would include sales, service and delivery of all our electric vehicles,” said Will Nicholas, a Senior Manager at Tesla. 

As for why Tesla doesn’t work with dealers, “the economics are such that traditional dealerships are motivated to gain revenue and stay in business. The majority of their revenue is from service of an internal combustion engine and since we don't build that technology... there's an inherent conflict of interest,” Nicholas added.

But McAreavy points out that automobile dealers in New York have, so far, sold 85% of the electric vehicles currently on the roads.

“Tesla's a good vehicle, I mean I think it's a great vehicle.  We would love to help them be successful but the reality of it is, their vehicle is not dramatically different than other electric cars in the market,” he said.  When asked what he says to those who think dealers just don’t want the competition from Tesla, McAreavy said, “Well, our car dealers compete every day. They compete with themselves. I would argue Tesla doesn't want the competition.”

Morelle said the reason he wrote the bill that would allow Tesla to expand is because the world is changing.

“In my mind, it meets the goals of the environmental community, it meets the goals of the consumer and particularly in an environment where it's gotten much easier for consumers to buy directly,” he told News10NBC.  

The bill is likely to be debated in Albany during the current legislative session.


Jennifer Lewke

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