Well, this is a new tactic we haven't seen before in the fight between franchised auto dealers and Tesla Motors, the Silicon Valley electric-car startup.
A pair of bills in the New York State Legislature, backed by New York state auto dealers would make it illegal to register Tesla cars within the state.
The bills, now pending in the last days before the Legislature adjourns for the summer, would make it impossible for the state to register any vehicle not purchased from an independently-owned third party.
Which is to say, a car dealer.
Only one qualifies
The only manufacturer that now sells cars directly to consumers, rather than through franchised dealers, is Tesla Motors [NSDQ:TSLA].
Rather than selling to dealers, who then sell to consumers, the company operates Tesla Stores--showrooms, essentially--where customers can ask questions and take test drives before buying their car online from Tesla itself at a set price.
The bills--A07844 in the Assembly and S05725--amend the state's vehicle and traffic law, "in relation to automobile
manufacturers and unfair practices by franchisors."
And it prohibits the state from issuing or renewing the registration of any car dealer in which a carmaker holds a controlling interest--unless that certificate was issued before July 1, 2006.
At 15:17 pm EDT, Tesla CEO Elon Musk tweeted, "NY Assembly passing bill to shut down Tesla, but Senate holding the line. Appreciate senators resisting influence of auto dealer lobby."
In other words, the bill has been narrowly crafted to prohibit renewal only of Tesla's stores. The bill does appear to allow temporary registration of such stores for no longer than one year.
As well as forbidding the state to renew licenses of existing Tesla sites, the bill also makes it illegal to license any future store or dealership owned by a manufacturer.
That goes beyond similar efforts, such as the March 2010 bill in Colorado that prohibited future Tesla-owned sites--but did not seek to shut down the state's pre-existing Tesla Store.
In other words, the bill has been narrowly crafted to prohibit renewal only of Tesla's stores. The bill does appear to allow temporary registration of such stores for no longer than one year.
It also appears to make it illegal for the state to register new Tesla vehicles not sold by franchised dealers--which, of course, Tesla doesn't have.
Sample letters
A sample letter available on the New York State Automobile Dealers Association website notes that the identical bills are "consensus" bills.
They have been, it says, "agreed upon by the Alliance of Automotive Manufacturers, the Global Alliance of Manufacturers, and all of the New York State Dealer Associations."
The letter--to be sent to senators or assembly members--urges the elected officials to cosponsor the bill in their house.
It says the bills "clarifies existing provisions of the franchise law to ensure fair dealings between dealers and franchisors."
They will also "level the playing field and help franchised dealers improve on those sales and job numbers in New York."
Finally, the bills "will also update the Act to address new circumstances."
NYSADA's website also has a downloadable copy of what appears to be an earlier markup of the bill text.
Stealth bills
The stealth nature of the bills may be demonstrated by the fact that neither bill is listed on the New York State Automobile Dealers Association "Legislative Efforts" page as bills it supports (or, for that matter, opposes).
Early this afternoon, Tesla CEO Elon Musk tweeted--twice--that New York residents should call their state senators.
Bottom-ranked for openness
The New York State Legislature has been rated among the lowest of all 50 states by good-government groups on issues as diverse as transparency, gerrymandering, and achievement.
It customarily passes a rush of bills on its last day (and fails to take action on many more).
Many of those bills have never been read by the elected officials voting on them, and were agreed to in closed-door meetings among the governor, the assembly speaker, and the leader of the state senate.
In April, a New York state court ruled that auto dealers could not prove they had been injured by Tesla's operations in the state, and dismissed their lawsuit.
Below is the statement issued by Tesla Motors at 2 pm today:
Bill Attempts to Put Tesla – America’s Leading Electric Car Company - Out Of Business In New York
A.7844A/S.5725A Hinders Consumer Choice, Hurts Economy, And Will Increase New York’s Carbon Footprint
The bottom line for New York consumers and New York suppliers is that if this bill passes, special interests in Albany will once again have gotten their way while robbing New Yorkers of choices in the marketplace, and Tesla will be put out of business in New York. The result would be that all of Tesla’s New York employees will lose their jobs. It means that New York-based suppliers to Tesla will lose business and New York consumers cannot buy the most advanced electric car in the world today. 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.
From the beginning, Tesla’s goal has been to catalyze the market for electric vehicles and selling through intermediaries at this stage of the company will not work. For Auto Dealer Associations to claim that restricting competition is in the best interests of the public is wrong and defies obvious common sense. If we are kept out of New York, it forestalls progress and defeats innovation.
Tesla has created jobs in New York at both its stores and service centers and the sales of its vehicles go into supporting the local economy. Tesla remains committed to bringing electric vehicle technology and its customer focused sales and ownership experience to New York consumers, while complying with all local and state laws.”