Video – Tesla Says Encouraged To Spend $3M on New Utah Store; Then Forbidden To Open

After speaking with Utah regulators Tesla says it came away feeling like it had a green light to open a store in Salt Lake City, spent $3 million to do so, but then the attorney general said no.

The California-based EV maker was forced to cancel plans two weeks ahead of a March grand opening, and now has a shuttered new facility and says it is seeking legislative avenues to open its store.

Meanwhile it is forbidden to sell Tesla cars, although cars bought out-of-state by Utah residents may be serviced.

It’s unclear whether Tesla may even display its cars in its showroom, reports KSL.com.

In a video posted by Park City TV, James Chen VP of Regulatory Affairs gives Tesla’s side of the story.

Utah’s law says Tesla may not own 45 percent of the dealership, so despite initial positive implications from the regulators, its decision is what it is.

Chen’s video explains why Tesla feels dealers have an inherent conflict of interest and won’t spend 3-4 hours required to educate new consumers.

SEE ALSO: Tesla Versus The Auto Franchising System, Part 5, Car Sellers’ Interests

He does not discuss the possibility of a sole Tesla-only franchise in which an independent franchise would have nothing but Teslas to sell, but this is Tesla’s view.

Other arguments Tesla makes come down to championing free markets and a sense that there remains no compelling reason for lawmakers to prevent manufacturers from owning their own stores.

It’s said these are archaic holdovers to prevent manufacturers from competing with their own dealers, but Tesla has no independent dealers, so Tesla says it ought to be exempt.

Regulators have held that a third-layer middleman – AKA a car dealership – represents a substantial financial intermediate layer between the public and automakers to protect consumers. If a company went out of business like Fisker, or a warranty repair was needed to be performed, the argument has been dealers have a stronger financial incentive to do so. They are invested locally, and need a good reputation to survive, goes one argument.

Meanwhile Tesla, which has met resistance in several other states soldiers on, and works behind the scenes with the governor’s office, attorney general, and local legislators to get the laws changed.

One possibility that’s not born fruit yet is proposed by Utah Rep. Kim Coleman, who sponsored earlier this year legislation the governor has said he’d consider adding to the agenda for lawmakers if they meet this year for a special session.

A spokesperson from Governor Gary Herbert’s office said it “will continue to work with legislators and all stakeholders to ensure Utah has the right policy to embrace innovative ideas while protecting consumers.”

ksl.com