Bloomberg News

Tesla’s Dealer Fight Widens as Missouri Weighs Sales Ban (2)

May 09, 2014

Tesla Motors Inc. (TSLA:US)’s battle to sell electric cars directly to consumers faces a new hurdle as Missouri’s legislature considers a measure to bar its company-owned store system.

“Anti-Tesla” language was added to a state House bill at the request of car dealers that explicitly requires consumers to buy vehicles through franchise dealerships, Tesla said yesterday in a statement. Missouri’s Senate passed the bill this week with no public comment or debate, said the carmaker that’s led by Elon Musk.

“Musk is trying to make Tesla a completely viable automaker, and to do that he wants a presence in as many states as possible,” said Karl Brauer, industry analyst for Kelley Blue Book, an automotive pricing and data company in Irvine, California. “Missouri’s potential isn’t so significant as a market, but as a part of that push.”

The challenge in Missouri comes as Tesla appeals New Jersey’s March decision to ban direct auto sales by manufacturers and the company works to keep selling Model S sedans at its Massachusetts stores. While Texas and Arizona also bar direct sales of Teslas, the Palo Alto, California-based company worked out arrangements in Ohio and New York this year to keep selling in those states.

“This extraordinary maneuver amounts to a sneak attack to thwart due process and hurt consumer freedom in Missouri,” Tesla said. The company’s only store in the state is in University City, near St. Louis, where it also operates a service center.

Sales Restrictions

In states that imposed sales restrictions, Tesla converted its stores to “galleries” that only display the Model S, priced from about $71,000, and give general information on electric cars. The restrictions haven’t prevented it from operating service centers to maintain customers’ vehicles.

Missouri Representative Glen Kolkmeyer, who sponsored the bill, didn’t respond to a call and e-mail on the matter.

The potential sales restriction came as Tesla had its biggest decline in six months.

Tesla rose 2.1 percent to $182.26 at the close in New York and has gained 21 percent this year. The shares had tumbled (TSLA:US) 11 percent yesterday after the company reported first-quarter Model S deliveries that were below the highest analyst estimate and said tight battery supplies would also constrain second-quarter sales.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net Niamh Ring


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  • TSLA
    (Tesla Motors Inc)
    • $261.82 USD
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