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NC bill would ban Tesla

| May 17, 2013 | Business Formation & Planning |

A new bill under consideration in the North Carolina legislature would make it illegal for Tesla, a manufacturer of electric cars, to use a direct-sales method to sell vehicles in the state. The bill would disallow Tesla’s usual practice of establishing a business in the state without using a licensed dealer. The proposed law would include online sales, the primary marketing method Tesla uses to sell its vehicles. The bill has passed the Senate and will be heard in the House.

The Palo Alto, California, company created the first all-electric sports car and has now produced the first premium electric sedan. The Model S has earned near-perfect ratings from Consumer Reports. According to the North Carolina Automobile Dealers’ Association, the bill conforms to current law that has prohibited the direct sales of automobiles in the state since the 1970s. The bill would simply update the definition of a dealer to include online sales models.

The Auto Dealers’ Association would like Tesla to apply for a license to be a dealer in the state and appoint representatives to make sales. The company could form a franchise agreement with a dealer to allow him or her to sell the cars then ship the models directly. This would also require the company to fall under the guidelines of the state Department of Motor Vehicles and to lease a showroom. Tesla has responded that the bill is an effort to shut down private enterprise and force the company to deal with a middleman.

Companies that are struggling with state regulations may find help from a business attorney. In many cases, legal representation may help the company overcome obstacles to conducting business and help it to earn profits even when state rules may be restrictive.

Source: ABC News, “Tesla’s Direct Sales Business Model Targeted By N.C. Bill“, Alexis Shaw, May 14, 2013

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