Tesla in Pact With New York Auto Dealers for More Car Stores

Mar 29, 2014 12:01 am ET

March 29 (Bloomberg) -- Tesla Motors Inc. and New York auto dealer lobbying groups reached an agreement that allows the electric-car maker to keep its five company-owned stores in the state and add others, Governor Andrew Cuomo announced yesterday.

The “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 in a statement. Legislation in New York will be introduced “in the near future” to implement the agreement, said Cuomo, a 56-year- old Democrat. The statement didn’t say how many other stores would be added.

The New York agreement comes less than two weeks after New Jersey Governor Chris Christie barred Tesla from selling cars directly to consumers at its two stores in that state. Tesla has said its locations at the Garden State Plaza in Paramus and the Mall at Short Hills in Millburn will become “galleries” when the ban takes effect.

Tesla is battling dealers state by state for the right to sell its cars directly to consumers. Ohio, New York, Maryland and other states have previously tried to block the company, and retailers in Texas successfully backed the nation’s toughest restrictions. Yesterday’s agreement with New York dealers came three days after Tesla reached a pact with the Ohio Automobile Dealers Association for up three stores in that state.

Dealers have said Tesla’s model would set a precedent that could let other automakers sidestep the way independent franchisees have sold and serviced vehicles for eight decades. If Tesla succeeds in bypassing middlemen, some argue that future startups or entrants from China or elsewhere could sell directly to consumers or even create online retail outlets that sidestep dealers entirely.

--With assistance from Mark Niquette in Columbus.