Tesla in Ohio: Positive Progress With New Sales Agreement

Tesla Model S in Red

As critics continue to fawn over Tesla Motors’  car, sales continue to grow, and the positive reviews and test results keep pouring in, it seems that the hardest part for the company right now is working with state governments to retain the legal ability to sell its Model S sedan within their borders. By and large, most states haven’t posed a problem, but a couple of them — namely Texas, New Jersey, Ohio, and a few others — have presented some pretty significant headaches for the company as local auto dealer associations were able to get into the legislative books first.

However, due to public outcry or Tesla’s promise of investment, states seem to be warming up to Tesla’s direct-to-consumer model and are even finding ways for dealer associations to remain protected and allow Tesla to operate in its own manner. Ohio has joined Washington state with a solution along the lines of the latter, as a new bill being presented in Ohio’s legislature will allow Tesla to operate no more than three retail locations. That doesn’t sound like a lot, but it’s far better than the all-out ban that some were pushing for.

Tesla can continue to have its stores in Easton and Cincinnati and can open a planned store in the Cleveland area, but it cannot open any additional stores, The Columbus Dispatch reports. The negotiation drew praise from both parties. Tesla’s vice president for business development, Diarmuid O’Connell, called the solution “a very good compromise,” according to the publication.

The bill specifically says that no automaker — apart from the three Tesla locations — can operate manufacturer-owned stores in the state, much like Washington’s compromise on the issue. In short, Tesla gets an exemption due to the nature of its vehicles, which don’t require many service needs, making a dealer model a failed prospect from the beginning, since many rely on services as a primary revenue stream.

Tesla Model S, photographed in Switzerland by James Lipman // jameslipman.com

“It protects the integrity of the law,” Tim Doran, the president of the Ohio Automobile Dealers, told the Dispatch, referring to the state law that deals with licensing new dealerships. Senate President Keith Faber, a Republican, said to the newspaper that the amended bill makes it clear that “if you’re a manufacturer and you want to sell, you have to sell through (independent) dealers.”

O’Connell told The Columbus Dispatch that he appreciates that Ohio legislators had an open process and invited Tesla to work on the compromise with dealers after the two sides met in person for the first time earlier this month after months of communicating via lawyers and lobbyists.

The amendment allows Tesla to open a third store, which will likely be put in the Cleveland area, as mentioned before. The news comes shortly after Texas Gov. Rick Perry called for a reconsideration of the state’s ban on Tesla sales, as well as clearance to operate retail stores in Arizona.