Tesla Motors Inc (TSLA): Car Sales Bill Dies in New York Minute?

Tesla Motors Inc (NASDAQ:TSLA) can apparently be its own effective political-action committee, thanks to CEO Elon Musk and the way he uses social media – including his Twitter account. In this space last week, we talked about the push that is being made against direct-sales of vehicles to consumers – a model used by Tesla – that is being promoted by dealerships around the country. The movement is gaining traction, as Texas and North Carolina has passed laws banning direct sales of vehicles, with other states in court.

The latest push was in New York where the state Assembly apparently approved a law that would ban all new-car sales in New York that did not originate at dealerships, which would essentially kill Tesla Motors Inc (NASDAQ:TSLA) and its direct-to-consumers, online sales approach. And it seemed like a fait accompli that if it got through the Assembly, the Senate would likely pass it forward for signature by Gov. Andrew Cuomo. However, at the 11th hour, after Musk tweeted out a campaign for his followers in New York to contact their state senators, the state Senate did reject the bill.

However, that is not the end of the battle. The bill could still be brought up again at a later time, but at least for now, Tesla Motors Inc (NASDAQ:TSLA) will still be able to sell cars in New York state. While Musk was campaigning for his own obvious self-interests, we were struck by another clause in the bill that would have had tremendous impact on car sales in a way that New York dealerships may not have anticipated.

There are always unintended consequences in bills that become law. We don’t know whether this bill’s consequences were actually unintended or very intentional, but we noted that this “Tesla bill” (as we call these anti-Tesla competition bills) not only would have banned direct sales of vehicles, but this New York state version would have also banned vehicles purchased out-of-state from being registered in the state.

What might this mean?

This clause would mean that consumers who lived in the state and could easily go to a neighboring state to buy a new vehicle – in an effort to pay less for vehicles and avoid the sometimes-prohibitive New York taxes – could do so, but only if it is going to be a collector’s item in New York or will only be driven in the neighboring state. Hmmm.

Anyway, Tesla Motors Inc (NASDAQ:TSLA) was apparently able to generate  some strong grassroots support  against the “Tesla bill,” after making an argument that restricting competition is the opposte of “good for consumers” as the dealerships maintained, and it made an argument about the state’s commitment to green energy. In a press release stating its case, Tesla wrote, “Banning Tesla from selling its vehicles is also a step in the wrong direction for reducing carbon vehicle emissions and the green environmental movement in New York. With the State of New York pushing so hard to lead green innovation supporting entire agencies for energy efficiency like NYSERDA, it is absolutely defies logic to ban Tesla from selling electric cars in New York.”

What are your thoughts? Should Tesla Motors Inc (NASDAQ:TSLA) be allowed to selel its vehicles with its current business model? Let us know your thoughts about this in the comments section below.

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