Tesla On Track To Win In Pennsylvania, But It Signals A Long Road Ahead

June 27, 2014

We've spent a lot of time documenting Tesla's attempts to overturn state franchise laws. Now, the company seems poised for another win -- this time, in Pennsylvania. But if it comes, victory could be bittersweet, pointing to a long series of obstacles littering the road ahead. 


When CEO Elon Musk and the rest of Tesla's team first set out to make a place for themselves in the U.S. auto market, the task must've seemed daunting. And yet, despite decades-old franchise laws, Tesla has managed to gain a foothold in many states.

Even where it hasn't, Tesla has spun public sentiment in its favor. Consumers often view Tesla as an innovative start-up that's being stymied by fat-cat car salespeople who simply want to preserve the status quo.

Having the public on its side has proven to be very, very important to Tesla. It's changed the tone of the debate, and almost certainly made politicians more eager to carve out space for Tesla.

Case in point: New Jersey, where earlier this year, Tesla was negotiating an arrangement that would've allowed it to sell directly to consumers. Then, the Motor Vehicle Commission and Governor Christie suddenly changed course, causing Tesla to sue the state. A few weeks later, a bill begin working its way through the New Jersey legislature that would allow makers of zero-emission vehicles (like Tesla) to sell their products and bypass franchise laws. It seems fairly clear that the bill came in response to public pressure to accommodate Tesla.

In fact, consumers feel so strongly about Tesla, the all-powerful National Automobile Dealers Association is beginning to feel the heat. That's why it recently launched a PR campaign to convince people about the importance of traditional franchise dealerships. (Judging from the comments on that linked post, not many people are buying NADA's argument, though.) 


A Tesla-friendly bill is now working its way through Pennsylvania, too. (In fact, the bill is so Tesla-friendly, it applies solely to Tesla, making room for no other start-up automakers that might come along in the future.)

The bill has passed the Pennsylvania Senate, and it's headed to the House. The bill has the support of the state dealers association -- in part because dealers are afraid that pro-Tesla sentiment among voters could force the overturning of franchise laws altogether.

But dealers also support the bill because it limits the size of Tesla's footprint to just five stores. New Jersey's bill would limit Tesla to four locations. The automaker has been limited to three in Ohio and five in New York.

And this is the problem Tesla faces. States like Pennsylvania and New Jersey are giving Tesla a place to set up shop, and while that's probably adequate for now, who's to say it'll be adequate next year or the year after?

For now, Tesla has to put on a brave face and be grateful for being accommodated, but Musk & Co. surely understand the limits these bills place on future expansion efforts. And that means that unless the U.S. Supreme Court somehow finds justification for overturning state franchise laws altogether, Tesla could soon be making dozens of return trips to dozens of capitol hills.


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