New York compromise allows Tesla to keep its company-owned stores

One state may have found a workable compromise in the war of Tesla versus the auto dealers. New York Governor Andrew Cuomo announced last week that the belligerents reached an agreement that allows the EV-maker to keep its five company-owned stores in the state.

“Today’s agreement reaffirms New York’s long-standing commitment to the dealer franchise system, while making sure New York remains a leader in spurring innovative businesses and encouraging zero-emissions vehicle sales,” Cuomo said, adding that legislation to implement the agreement will be introduced “in the near future.”

Mark Schienberg, president of the Greater New York Automobile Dealers Association, said dealers agreed to the compromise so that other provisions they want in franchise legislation won’t get bogged down by the Tesla dispute.

Tesla’s five New York stores will be grandfathered in, but the company won’t be allowed to open new ones. The agreement prevents other manufacturers from opening stores, and tightens up the language prohibiting factory stores in New York.

“I think this works out well for dealers and consumers and opens up opportunities for Tesla,” Schienberg told Automotive News. “I don’t think this weakens the franchise system at all.”

Of course, this battle has never really been about Tesla, which is far too small to pose a serious threat to dealers for the likes of GM and Ford. As Automotive News noted, the real fear is that Tesla’s model could set a precedent for other, larger automakers (or perhaps the dreaded Chinese) to cut out the middleman, and that auto dealers could go the way of travel agents and record stores. The New York agreement, which appears to let Tesla pursue its direct sales model while shutting the door for other automakers to do the same, could point the way forward for other states as well.

 

Source: Automotive News
Image: Jack Amick/Flickr