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Arizona to Continue Upholding Tesla Direct Sales Ban for Now

April 16, 2014

It looks like Tesla Motors Inc. has once again lost a battle against auto dealers. Arizona’s ban on the electric car manufacturer’s direct sales model will remain for at least another year, after the bill that would have lifted the ban died in the state senate.

The bill that would have permitted Tesla to continue selling its cars at its factory-owned stores in Arizona appears dead after the bill failed to make it to the floor for a vote this session. Because the session will end in a week, it will be another year before a new bill will be debated.

Tesla was not happy with the news. The company held the Arizona Automobile Dealers Association (AADA) responsible for the death of the bill.

“Eventually, as a result of the dealer led attacks, the bill ran out of time in a legislative session that was dominated by budget wrangling and subsequently cut short,” Tesla said in a statement.

The automaker behind the Model S is not backing down, though. It promised to continue the fight.

“Tesla is grateful for the organic support we encountered within the Arizona legislature and the broad outpouring of support we received from the citizens of Arizona. We look forward to re-engaging next year,” it said.

The AADA refuted Tesla’s claim, saying that the association should not be blamed for what happened. AADA president Bobbi Sparrow pointed the finger at the advocates of the pro-Tesla bill, asserting that they “have no one to blame but themselves.”

She also insisted that Tesla should adhere to the existing rules if it wants to continue selling cars in the state. “They can play by the rules that are serving Arizona well with 28,000 jobs and nearly 25 percent of the state sales tax revenue,” Sparrow said.

This development has caused an Arizona senator to believe that the state is now less likely to be chosen as the location for Tesla’s Gigafactory. According to a report by the Wall Street Journal, Republican Senator John McComish thinks that the death of the pro-Tesla bill affects the state’s bid to be the battery plant’s site.

Tesla is planning to build a large-scale facility for battery manufacturing, and the project’s cost is estimated at $5 billion. The plant will be employing about 6,500 people. There are four states in the running: Nevada, New Mexico, Arizona and Texas. The last two states prohibit Tesla from selling their cars directly to the public.

“There was never any guarantee, and nobody implied that there was a quid pro quo at all,” McComish said. “But simply put, it doesn’t help our chances.”

Sparrow disagreed with McComish. She said the death of the legislation will not affect Arizona’s bid to be the Gigafactory’s location. She is convinced that the legislators did not decide on the matter based on anything related to the facility.

“I think Tesla will put their battery factory right where they wanted it from the beginning,” Sparrow said. “It had nothing to do with what was passed in any state.”

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