Dealers’ group: RI Tesla sales would hurt businesses, customers

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PROVIDENCE, R.I. (WPRI) – The Rhode Island Automobile Dealers Association is pushing back against the governor’s interest in bringing Tesla Motors sales to the state, saying the move could be detrimental to small businesses.

“I would like Tesla to be able to sell here,” Gov. Gina Raimondo said Saturday following a speech by Tesla CEO Elon Musk at the National Governors Association summer conference, which was held in Providence this year.

“Right now I see Teslas driving around in Rhode Island, they’re being purchased in Massachusetts,” she said. “It would be a great thing if they could be purchased in Rhode Island so we get the sales tax revenue, frankly, and also for our customers.”

State law in Rhode Island currently prohibits automotive manufacturers from selling directly to customers without using a dealership; Tesla currently only sells direct. The 14-year-old company is known for making high-end, cutting-edge electric vehicles.

“It’s very easy to put something in place which is an inhibitor to innovation without realizing it,” Musk said to a packed ballroom of governors, lobbyists, journalists and other officials during his onstage Q&A with Nevada Gov. Brian Sandoval on Saturday.

“It’s always important to bear in mind that regulations are immortal,” he said. “They never die unless somebody actually goes and kills them.”

But Jack Perkins, executive vice president of the Rhode Island dealers group, supports the current laws.

“They’re good for small business as well as good for the consumer,” Perkins told Eyewitness News. “Manufacturers have far more economic powers than do dealers. Dealers are local. They’re in the community and they’re small businesses. Auto manufacturers are not, they’re big multinational corporations.”

Many states currently have similar laws on the books, and some have taken further steps to prevent direct-to-consumer Tesla sales in their states. Tesla is currently suing the state of Michigan for its ban on direct sales.

Tesla currently has stores and galleries in 26 states, including Massachusetts and Connecticut, as well as Washington, D.C.

Perkins said allowing car companies like Tesla to sell direct to customers in Rhode Island could put independent dealerships under pressure. He also contends the current laws are better for customers.

“If you have multiple local small businesses, independently owned, trying to make the sale, all trying to get your business, the prices are going to be more competitive,” he said.

Tesla’s sales model doesn’t include customer negotiation – the sticker prices on the cars are what they sell for. Perkins said customers are better served by competing dealers who can offer better prices.

“[Under the] Tesla model there’s no haggling, I grant you that, because there’s no other place to go,” he said.

The Rhode Island law that prevents direct sales from manufacturers dates back to the 1970s, according to Perkins. He said he welcomes the opportunity to talk to the governor about why it exists, and why it’s best for the state.

Perkins also argued Tesla isn’t actually being prohibited from selling its cars here.

“If Tesla would just play by the rules that everybody else plays by, they could certainly sell their cars here,” he said. “No one is stopping them, they just don’t want to do it the way the law is set up.”

Raimondo said over the weekend she wasn’t sure what regulatory or legal changes would have to be made to pave the way for local Tesla sales, but said it is “something that I’m going to look into.”

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