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Tesla Wins in Ohio, Gets Support from Florida and NJ Senators

March 26, 2014

After being banned from directly selling its cars in New Jersey, Tesla Motors Inc. wins a minor victory in another state. In Ohio, a Senate committee approved a bill that prohibits automakers from selling directly to buyers. However, there is an exception—Tesla. The bill allows the electric car manufacturer a maximum of three outlets in the state.

According to Ohio Senator Scott Oelslager, the committee chairman, the measure was the result of an agreement between the automaker and the Ohio Automobile Dealers Association (OADA). The latter sought to prevent Tesla from selling their products without a middleman.

The legislation allows Tesla, which has stores in Columbus and Cincinnati, to operate a third store in the state on the condition that the automaker is not sold or acquired, and that it will not build vehicles other than the all-electric variety.

The bill also forbids Ohio from issuing a dealer’s license to a car manufacturer other than Tesla.

The OADA is not exactly satisfied that Tesla will be allowed to maintain its direct selling business model in the state. Nonetheless, it is a solution they can live with. According to OADA president Tim Doran, it was a “reasonable solution that allows predictability into the future for the dealer model.”

Tesla welcomed this development. Vice President of Business Development Diarmuid O’Connell said that the measure will let the company proceed with educating customers about its products in its own retail establishments, which are fundamental in introducing the new technology.

The measure is set to move to the full Ohio Senate for consideration.

Meanwhile, a senator from another state expressed support for Tesla. Senator Marco Rubio, R-Fla., told CNBC that he is fine with the car manufacturer selling directly to consumers in his state.

Rubio, who is a potential GOP presidential candidate in 2016, surprised many by saying that consumers should be allowed to purchase the products they need. He also went on to suggest that Tesla’s electric cars are safe and backed by consumer confidence.

The state senator’s comments surprised Florida Automobile Dealers Association (FADA) president Ted Smith. Florida dealers also oppose the direct selling model, but they are not trying to shut down Tesla’s six stores in the state. Smith and other dealers do not consider Tesla as a big threat to them, since the automaker caters to a select few.

Interestingly, a New Jersey lawmaker seeks to reverse his state’s ban on Tesla’s direct sales. Assemblyman Tim Eustace introduced a bill that will let the automaker continue selling its electric cars directly to New Jersey customers.

In a statement, Eustace pointed out that the ban was forcing business away from the state and therefore hurting the state’s economy. Because of the ban, consumers in New Jersey who want a Tesla electric car will have to go elsewhere to make the purchase.

Effective April 1st, Tesla’s two retail stores in New Jersey will be prohibited from selling vehicles. However, the establishments are allowed to stay open as galleries, where the company can still display its products and answer consumer inquiries. The store staff are not allowed to discuss prices and close a sale.

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