(The Center Square) – A bill “protecting consumer choice by creating a fairer marketplace for auto sales” could, if passed, threaten Tesla’s direct-to-consumer model and cause the electric vehicle automaker to close its service centers in Washington state.
Tesla – founded and led by billionaire Elon Musk – is currently the only EV carmaker that can make direct sales in Washington due to an exemption obtained a decade ago when the company was the lone EV manufacturer seeking access to the market.
While companies like Rivian and Lucid can have physical locations in Washington to display and promote their EVs, interested parties can’t test drive vehicles, discuss purchasing options, or buy a vehicle. Would-be customers have to go online to buy, lease or get questions answered.
Bipartisan legislation, Senate Bill 5377, sponsored by state Sen. Rebecca Saldana, D-Seattle, would lift the ban on direct sales, putting other EV companies on a level playing field with Tesla in terms of customer transactions.
According to a bill report on SB 5377, the legislation “Repeals the exemption for vehicle manufacturers that held a vehicle dealer license on January 1, 2014 to the prohibition on manufacturers competing with new motor vehicle dealers.”
Susan Daaga, general counsel for the Renton-based Washington State Auto Dealers Association, spoke in favor of SB 5377 during a Tuesday public hearing before the Senate Labor & Commerce Committee.
She noted that “the franchise dealership model has been and continues to be the ideal model for delivering and servicing vehicles in the state of Washington.”
According to Daaga, franchise models “employ over 20,000 workers, accounting for nearly $2 billion in annual payroll. They generate millions in tax revenue for vital state services. They make substantial contributions to local nonprofit and charitable organizations.”
She went on to tout the ecological benefits of the franchise model in helping to boost EV sales.
“They provide quick, convenient access to vehicle service in over 70 communities around the state, and they’re leading the way in the EV revolution, offering dozens of EV models and partnering with the Department of Commerce to assist nearly 6,000 low-income Washingtonians purchase new EVs through the state’s 2024 EV Instant Rebates Program,” Daaga said.
According to the legislation itself, the goal is to end the ban on direct sales “while ensuring that traditional auto dealers are supported in transitioning to a zero emissions vehicle-focused market.”
Washington is among the states that have joined California in requiring all new automobiles sold in the state to be zero-emission vehicles, or ZEVs, by 2035. This includes electric, hydrogen-fueled, and hybrid vehicles with at least 50 miles of electric-only range.
Ava Ames, Tesla’s Northwest regional sales and delivery manager, spoke against SB 5377.
“Tesla has been and continues to be Washington state’s catalyst for electric vehicle adoption,” she told the committee. “Taking away our ability to sell [directly] to customers limits consumer choice, hurts Washington’s continued transition to sustainable transportation and eliminates jobs for hundreds of people and families who are still very much dedicated to leaving the world in a better place than they found it.”
According to the Senate Committee Sign In website, 111 people signed up to testify on SB 5377, while 1,104 signed up to express their position – pro, con, or other – without testifying.
