Recently in Harrisburg, Pennsylvania, Governor Tom Corbett signed new legislation that granted Tesla Motors the approval to open five new dealerships in the state. Tesla CEO and founder Elon Musk pushed for the bill after the Pennsylvania’s legislation had inhibited the company’s ability to expand into the area as a legitimate motor vehicle dealer.
The bill garnered widespread approval after Senator John Rafferty of Montgomery County introduced it earlier this year in June. The new law applies to any electric car manufacturer and carries certain obligations that need to be carried out by the dealer, including the dealer cannot hold a controlling interest in another make. They must do business exclusively with their own brand which is something that Tesla Motors has always done.
Musk’s electric car manufacturing company has been experiencing a struggle to implement their direct sales model in cities. However the acceptance of their business in Pennsylvania should give them confidence, according to economic observers. Representatives from the company also stated that they believe their mainstream introduction into the Unites States will be a sort of domino effect, and more will follow suit now that Pennsylvania has made their support for Tesla Motors known.
Diarmuid O’Connell, Vice President of Business Development for the EV dealership, said in a press release that everyone at Tesla hopes that the process in Pennsylvania will serve as a reminder of how beneficial cooperation is to all parties involved, legislators and dealers included. The executive also added that their pursuit for the new law was supported by the Pennsylvania Automotive Association.
Many economic observers are declaring that Tesla Motors stock will rise significantly following their approval to open dealerships in Pennsylvania. Ben Kallo, an equity analyst for Robert W. Baird and Co., assigned an “Outperform” rating to the stock. He went on to explain that state legislatures should be feeling pressure to change their laws to allow Tesla Motors to open dealerships in their state, because the company is expected to become very profitable in the future.
Kelly Blue Book senior analyst Karl Brauer, said that Tesla’s ability to achieve acceptance in the United States is a testament to Musk’s breaking of the traditional auto sales model and attributes some of the credit for their trending automotive business to that fact. Many automobile manufacturers have fought against the direct sales model from Tesla Motors, and their speedy approval to open dealerships in Pennsylvania and other states. The National Automobile Dealers Association is noted to be one of the major antagonists to Tesla’s methodology of sales.
Other factions worry that as Tesla becomes more successful, their direct sales model will become the mainstream preference and other automakers will follow suit with their models. The Car Connection stated that as Tesla Motors becomes more successful, their responsibility to stay true to what made them so popular becomes even more prudent.
The EV manufacturer also received approval from Ohio and New York. They are currently pursuing other metropolitan areas. This is due to Pennsylvania, Governor Tom Corbett recently signing new legislation that granted Tesla Motors the approval to open five new dealerships in the state.
By Andres Loubriel