Ohio auto dealers pressuring state to halt Tesla’s expansion

Robert and Sarah Reynolds, left, check out a new Tesla all electric car with Tesla representatives John Van Cleave and Raven Rivera, right, Monday, March 17, 2014, at a Tesla showroom inside the Kenwood Towne Centre in Cincinnati.

COLUMBUS — Ohio auto dealers are sparring with California-based automaker Tesla, which is selling its electric cars from two Ohio storefronts.

Ohio is among states proposing to block Tesla from setting up additional direct-sales galleries on grounds they undercut traditional auto dealerships. Last Tuesday, New Jersey officials approved a regulation effectively prohibiting automakers from going straight to customers. Tesla vice president Diarmuid O’Connell visited Ohio legislative leaders that same day to try to discourage them from passing similar restrictions.

“The bill would shut down our ability to grow in the Ohio market and, frankly, it’s just a first step to them shutting down our existing businesses,” Mr. O’Connell said. “This is the pattern we see in other states.”

The administration of Republican Gov. John Kasich, through the Bureau of Motor Vehicles, issued a license to Tesla authorizing the company to open its own stores in the Cincinnati and Columbus areas.

Joe Cannon, a lobbyist for the Ohio Automobile Dealers Association, told lawmakers in testimony last week that the decision means Ohio’s longstanding licensing rules “have been thrown upside down.”

The association filed unsuccessful legal action against Tesla’s two existing Ohio stores, so now it is fighting for passage of a bill that would prevent Tesla from expanding to other locations.

Ohio dealers — with 830 dealerships, 50,000 employees, and $2 billion in payroll annually — say their businesses can only prosper when the law separates manufacturers and dealers. They view the license Ohio granted to Tesla as opening a Pandora’s box.

The decade-old car company is based in Palo Alto, Calif., and sells two models: the two-seat sports-style Roadster, at about $100,000; and the Model S sedan, at about $75,000. It would like to eventually offer a $35,000 economy model, he said.