Arizona is one of four states that currently bans Tesla sales, but some legislators are hoping to change that.
Yesterday, Arizona’s House Commerce Committee voted in favor House Bill (HB) 2216, allowing it to advance to the next stage of approval. If it passes, the law will allow a manufacturer, such as Tesla, to sell vehicles directly to consumers, but only if two provisions are met:
“The factory does not have an established business relationship with the dealer; and,
“The factory has an Arizona based service center to handle repairs, warranty issues or recalls on the vehicles.”
HB 2216 – sponsored by Representatives Warren H. Peterson (R), Darin Mitchell (R) and Anthony Kern (R) – also focuses on the semantics behind vehicle sales, clarifying what constitutes a “dealer” and a “factory.”
A similar bill sponsored by Rep. Peterson passed through the Arizona House last year, but later stalled in the state Senate.
“What has happened … is that in some states, they are moving to outlaw that kind of operation,” Arizona Senate Majority Leader John McComish said last March about the previous bill. “But I think we should be about opportunities for innovation rather than stifling innovation.”
Last week, Arizona Governor Doug Ducey made similar remarks in favor of reducing state regulations on automotive companies.
“Whether it’s Apple or a newcomer that’s just starting, or whether it’s a company like the story last week with Uber and Lyft that’s got unnecessary regulation on them, we are going to clear the pathway to be the most entrepreneurial, most innovative state in the country,” said Ducey.
Unlike most automakers, who use franchised dealers to sell new cars, Tesla owns and operates showrooms with a direct-to-consumers sales method. CEO Elon Musk stands firmly behind this approach, stating it lets the company maintain more control over the sales process and protects profits that would be lost through the franchised-dealer system.
Those who support the Tesla ban, including Arizona Automotive Dealers Association, say the direct-to-consumer sales method gives Tesla an unfair advantage and removes regulations put in place to protect consumers.
Arizona is not the only state where Tesla has run into barriers. Michigan, New Jersey and Texas recently updated laws to ensure that new vehicles cannot be sold directly by the carmaker.
Last month, the Missouri Automobile Dealers Association filed a similar lawsuit against the state’s Department of Revenue and its director. The lawsuit calls Tesla’s sales illegal and asks that the carmaker’s dealer license be revoked.
The State, USA Today