Bloomberg News

New York Lawmakers Set Aside Bill Threatening to Cut Tesla Sales

June 21, 2013

New York’s Assembly set aside a bill that Tesla Motors Inc. (TSLA:US), the maker of electric cars run by Elon Musk, had said would shut down its Empire State operations.

The lower chamber adjourned its legislative session late yesterday without acting on the measure. Lawmakers in the Assembly aren’t scheduled to reconvene until January.

The bill introduced in the legislature this month would have prevented car manufacturers from selling directly to consumers, as Tesla does. It also would’ve blocked registrations of new vehicles bought out of state. The Palo Alto, California-based manufacturer said a ban on selling cars directly rather than through dealers would have forced it out of New York.

“Tesla’s goal has been to catalyze the market for electric vehicles and selling through intermediaries at this stage of the company will not work,” Diarmuid O’Connell, a Tesla vice president, said yesterday in a statement while the bill was pending. “It forestalls progress and defeats innovation.”

Opposition to Tesla’s direct-sales business model has grown from auto dealers across the country. Since last year, lawsuits brought in New York and Massachusetts have sought to block the company’s practice, while legislation to ban it also has been pursued in Texas. The company has operations in New York City and its northern suburbs.

Tesla Exception

Senator Lee Zeldin, the Long Island Republican who sponsored the bill in the upper chamber, proposed a separate measure to carve out an exception for Tesla. Had both measures passed, the company wouldn’t have been affected, he said.

“Our goal is not to adversely impact any business operating in the state of New York,” Zeldin said in an interview in Albany.

Tesla’s sales methods threaten to undermine an industry that employs 90,000 workers statewide, trade groups such as the Greater New York Automobile Dealers Association said yesterday in a letter to lawmakers. “Tesla’s investment in New York has been to rent store fronts in malls with a handful of employees,” the letter said.

Tesla fell 1.1 percent to $99.55 at the close yesterday in New York. The shares have almost tripled this year, compared with a 12 percent price gain for the Russell 1000 Index. (RIY)

To contact the reporters on this story: Freeman Klopott in Albany at fklopott@bloomberg.net; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net;

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net; Jamie Butters at jbutters@bloomberg.net.


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Companies Mentioned

  • TSLA
    (Tesla Motors Inc)
    • $269.7 USD
    • 5.84
    • 2.17%
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