Bloomberg News

Tesla Says Bill Backed by Dealers Will Kill New York Sales (2)

June 21, 2013

Tesla Motors Inc. (TSLA:US), the maker of electric cars run by Elon Musk, said legislation in New York pushed by car dealers seeking to block direct auto sales would put the company out of business there.

The bill introduced in the legislature this month would prevent car manufacturers from selling directly to consumers and keep new vehicles bought out of state from being registered in New York. The measure is set for an Assembly vote today, said Michael Whyland, a spokesman for Speaker Sheldon Silver, a Manhattan Democrat. It isn’t on the Senate’s agenda for today.

“The bottom line for New York consumers and New York suppliers is that if this bill passes, special interests in Albany will once again have gotten their way while robbing New Yorkers of choices,” Diarmuid O’Connell, a Tesla vice president, said in a statement. “Tesla will be put out of business in New York.”

Tesla, which sells its products directly through its own stores, faces growing opposition from auto dealers across the country. Since last year, Palo Alto, California-based Tesla has faced lawsuits in New York and Massachusetts to block direct sales, and legislation prohibiting the practice in Texas and other states.

“From the beginning, 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,” O’Connell said in the statement. “If we are kept out of New York, it forestalls progress and defeats innovation.”

Job Cuts

If passed, the New York bill would make purchasing Tesla automobiles in the third-most-populous state impossible under the company’s current operating model, said Shanna Hendriks, a spokeswoman for the manufacturer. It also would have to close facilities in New York City and northern suburbs, Hendriks said.

The company, which posted its first profit in this year’s first quarter, intends to deliver 21,000 of its Model S rechargeable sedans this year.

Senator Lee Zeldin, the Long Island Republican who sponsored the bill in the upper chamber, said it probably won’t come up for a vote there today, which would effectively kill it for the year. He said he has proposed a separate measure that would carve out an exception for Tesla, letting it operate as it currently does in the Empire State, even if the ban passes.

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

Tesla fell 1.1 percent to $99.55 at the close 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: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net; Freeman Klopott in Albany at fklopott@bloomberg.net

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


Steve Ballmer, Power Forward
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • TSLA
    (Tesla Motors Inc)
    • $233.9 USD
    • 2.80
    • 1.2%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus