Arizona law puts brakes on Tesla car sales - Your West Valley News: Topstory

Arizona law puts brakes on Tesla car sales

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Posted: Monday, June 24, 2013 4:15 pm

Want one of those new Tesla all-electric cars that Consumer Reports has been raving about?

If you’re an Arizona resident, you’re going to have to jump through some extra hoops, all because of a state law designed to protect car dealers.

Yes, you can go take a look at the cars, which start at $70,000, at what the company calls its “gallery” at Scottsdale Fashion Square mall. You can kick the tires, sit behind the wheel and ask questions.

But you can’t buy one there. And you can’t take it for a test drive.

In fact, the employees in Arizona really can’t even talk much about price.

Instead, you have to either drive to California or decide you like it so much that you’re willing to place an order online — with a $2,500 refundable deposit.

It’s not by choice, explains company spokeswoman Shanna Hendriks.

“In order to sell cars in Arizona, you need to have a dealer’s license,” she said. And Tesla does have some dealerships elsewhere. But not here.

“A manufacturer cannot be a dealer in this state,” said Bobbi Sparrow, president of the Arizona Automobile Dealers Association. Arizona law prohibits manufacturers from selling directly to Arizona consumers.

And that, she said, is by intent.

“We put that in law in 2000,” Sparrow said.

One purpose, she said, is ensuring that buyers have dealerships available should a vehicle be recalled or need service. And Sparrow said since most areas have multiple dealerships, that ensures competition for customers which, in turn, keeps prices down.

“If you’re the manufacturer, you have one set of pricing,” she said, with no incentive to knock down prices.

Sparrow acknowledged the law is also there to protect dealers who have invested money in setting up a franchise for a specific manufacturer. Allowing a manufacturer to sell directly to consumers, Sparrow said, would allow them to financially squeeze out the dealers, leaving them with buildings, car lots — and nothing to sell.

She said most other states have similar laws.

“They’re trying to buck the system,” Sparrow complained.

So far, Tesla has gotten around the laws in Arizona and most other states because the transaction technically occurs in its home state of California. That has led legislators in places like North Carolina to propose tightening their dealership laws.

Hendriks said Tesla is fighting new legislation, and, in some states, challenging their existing laws.

“It’s a huge hindrance to customers who want to buy our vehicles,” she said.

Hendriks said Tesla is managing to work within the existing Arizona laws to sell vehicles to Arizona residents despite the hurdles created by the franchise law.

“It’s a great market for us,” she said, though Tesla would not disclose specific Arizona sales.

The publicly traded company’s most recent quarterly report showed $555.2 million in sales.

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