Tesla, the automaker behind high-end electric vehicles, could be prohibited from selling in North Carolina under legislation moving through the statehouse.

At issue is not what Tesla sells, but how it sells its cars.

Instead of using dealerships, Tesla markets and sells its automobiles through the Internet or by phone. This new business model of selling vehicles has upset owners of car dealerships who see Tesla as a threat to the traditional way of making deals.

That is why the North Carolina Automobile Dealers Association sponsored a law that would make it illegal for any carmaker to bypass dealerships and sell directly to customers.

“They’re trying to insulate the dealer franchise model from any competition,” Diarmuid O’Connell, Tesla’s vice president for corporate and business development, told the Raleigh News & Observer. “It’s a protectionist move to lock down the market so we have to go through the middleman–the dealer–to sell our cars.”

Only 80 Teslas have been sold to date in North Carolina.

The cars are pricey, with the Tesla Model S car starting at $49,900 but reaching upwards of $100,000 with options added.

The legislation cleared a state Senate committee, but has yet to be voted on by the full Senate. The House would also have to approve the measure before it could become law.

The only other state that currently restricts direct auto sales to the public is Texas. There, Tesla is able to use galleries to showcase its cars. But company representatives cannot discuss pricing or offer test-drives at galleries. Texas customers can still special-order Teslas online.

Ronald Dhing, a North Carolina resident and happy Tesla owner, drove about 200 miles to Raleigh, on a single charge, for the opportunity to speak publicly before the Senate committee, an opportunity he was not afforded. 

Dhing voiced his frustration to the News & Observer, “I hate it that the federal and state governments work so much to promote alternative fuels and now at the doorstep of it they want to block this,” he said. “It’s insane.”

-Noel Brinkerhoff

To Learn More:

Law would Stop Tesla Electric Car Sales in NC (by John Murawski, Raleigh News & Observer)

Tesla's Direct Sales Business Model Targeted By N.C. Bill (by Alexis Shaw, ABC News)

Senate Bill 327 (General Assembly, North Carolina) (pdf)

Electric-Car Maker Tesla Dukes it out with NY Times after Bad Review (by Ken Broder, AllGov California)

Judge Rules North Carolina License Plates Unconstitutional (by Noel Brinkerhoff and David Wallechinsky, AllGov)

North Carolina First State to Outlaw Student Cyber Attacks on Teachers (by Noel Brinkerhoff and David Wallechinsky, AllGov)

North Carolina Developers Promote Law to Limit Planning for Rise in Sea Level (by Matt Bewig, AllGov)

North Carolina House Committee Votes to Ban TV for Death Row Prisoners (by Noel Brinkerhoff, AllGov)