New York lawmakers are trying to shut down Tesla stores

New York state lawmakers have launched an effort to shut down Tesla’s stores in the state by revoking its waiver to allow direct sales.

Several states in the US have laws prohibiting the direct sale of electric vehicles to the public without going through third-party dealerships.

These bans stem from outdated laws intended to protect car dealers from their own automakers supplying the vehicles.

The idea is that automakers cannot open a company-owned store next to a third-party car dealer after they have invested in selling and servicing their cars. It would be unfair competition.

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Now, some car dealerships are using those old laws to prevent automakers that have never had deals with third-party franchise dealers, such as Tesla and Rivian, from selling their vehicles to the public, even though it constitutes fair competition.

Tesla has been fighting those laws in many states with some success.

In New York, the anti-direct sale law remains in effect. Still, Tesla managed to obtain an exemption to open a few stores and service centers, despite its bid to expand being curtailed by the local dealership association.

Now, state legislators in New York are pushing to remove Tesla’s exemption and grant it to other electric vehicle (EV) automakers.

Senator Patricia Fahy, who was once an ally to Tesla in its fight to be allowed to sell in New York, is now leading the effort to remove Tesla’s waiver (via New York Times):

Ms. Fahy, a Democrat whose district includes Albany, and other state lawmakers are pushing to revoke a legislative waiver that has let Tesla directly operate five New York dealerships rather than sell cars through dealer franchises, as other carmakers must do.

Fahy’s effort stems from her regret of having supported Tesla in the past:

“Maybe I’m making amends,” Ms. Fahy replied when asked about her previous support for Tesla. Mr. Musk, she said, is “part of an administration that is killing all the grant funding for electric vehicle infrastructure, killing wind energy, killing anything that might address climate change. Why should we give them a monopoly?”

Many, like Fahy, believe that CEO Elon Musk’s support for Trump and their efforts to curtail EV adoption amount to Musk pulling the ladder that helped Tesla dominate the EV space, just as other EV companies need it.

To be fair, the state senator is not completely changing her stance on direct sales because of Musk’s involvement with Tesla. Instead, she changed her opinion on giving Tesla a waiver:

Ms. Fahy now views Tesla’s waiver as an unfair advantage, and wants the company to forfeit its five licenses by 2026. Under her plan, the licenses could be redistributed to rival electric-vehicle manufacturers like Rivian, Lucid and the Volkswagen affiliate Scout Motors, which also employ a direct-to-consumer sales approach.

Tesla has long outgrown its waiver allowing five stores in New York, and lately, it has started using a loophole to open stores on native land in the state.

Electrek’s Take

I’ve made my thoughts clear about direct sales. They should be allowed for any automakers who don’t use franchise dealers. That includes Tesla.

I think Tesla should be allowed to sell its vehicles in New York, and people should be allowed to boycott them.

However, I agree that Tesla getting a specific waiver is unfair. Any new automaker, like Rivian, Lucid, etc., should also be able to open stores freely in the state.