Dealers had filed lawsuits challenging Tesla’s presence in the state, arguing that the automaker’s direct sales model violates existing franchise laws. One of the legal challenges failed to convince a state judge, who opined that dealers couldn’t use the franchise laws — designed to protect them from automakers — as a means to eliminate potential competition.
Texas Governor Rick Perry and Florida Senator Marco Rubio recently voiced support for Tesla’s strategy, finding conflict between the lobbyists’ position and the Republican party’s free-market ideology.
Without high-level support from politicians, aside from New Jersey Governor Chris Christie, the lobbyists have changed tack. The New York agreement follows a similar compromise in Ohio, where dealers have agreed to allow the company to continue operating three locations.
“Today’s agreement reaffirms New York’s long-standing commitment to the dealer franchise system, while making sure New York remains a leader in spurring innovative businesses and encouraging zero emissions vehicle sales,” said New York Governor Andrew Cuomo.
In New Jersey the lobbyists successfully pushed for a backroom deal that would have effectively pushed Tesla out of the state, but the move was immediately met with backlash as legislators promised to draft new legislation that would loosen the franchise laws. Tesla wanted to avoid a state-by-state fight, and the gentlemen’s agreements allow it to continue operating without being forced to lobby for restrictions to franchise laws.
Cuomo suggests the New York compromise will be formally implemented in legislation in the near future.
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