Ohio Republican Aims to Kill Tesla Motors Dealerships

Ohio Senator Tom Patton (R-Strongsville) has proposed legislation to prevent auto manufacturers from opening dealerships in the state, a move seemingly targeted at electric car manufacturer Tesla Motors.

Sen. Tom Patton (R-Strongsville)

California-based Tesla Motors utilizes a unique sales model, selling directly to consumers through 48 manufacturer-owned company stores or galleries located in 23 states. Tesla already has 3 dealerships in Ohio.

Tesla’s model of targeting wealthy early adopters while cutting out the middleman of traditional dealers has been fought by dealers’ lobbyists across the country. Legislative efforts to block Tesla dealerships failed in North Carolina, New York, and Minnesota, but succeeded in Texas and Virginia.

Last December, Sen. Patton inserted Amendment AM-0443 into Senate Bill 137 (SB 137) —a bill meant to reduce accidents involving maintenance workers and emergency crews on Ohio highways — at the request of Ohio Automobile Dealers Association (OADA) lobbyists.

Campaign finance reports reveal that Patton received at least $42,825 from state and national auto dealership owners, employees, and political action committees (PACs) between 2002 and 2013.

After Patton’s SB 137 amendment was removed by the House Transportation, Public Safety, and Homeland Security Committee, Sen. Patton submitted Senate Bill 260 (SB 260).

If enacted into law, SB 260 would forbid issuance of motor vehicle dealer permits when the applicant “is a manufacturer or a subsidiary, parent, or affiliated entity of a manufacturer.”

Patton asserted in an interview with Media Trackers that SB 260 was not an “anti-Tesla bill,” but was intended to “protect the businesses, the Ohio businesses, that have spent money building up their dealerships — employing Ohio salesmen, Ohio technicians, Ohio support staff, people who work here in Ohio.”

“How is it [Tesla’s dealership model] ‘innovative?’ How is Tesla different from Honda? Do they make cars? The answer would be ‘yes.’ Do they sell cars? That’s where the difference comes,” Sen. Patton said.

“Honda sells their cars through a Honda dealer network, okay,” he continued. “What Tesla is trying to do is to eliminate the dealer franchise agreement that we’ve established—it’s not a new business model, it’s just a way around the existing one.”

Not all Ohioans are upbeat about SB 260’s proposed protections of car dealerships not owned by manufacturers.

“Where we’ve gone astray in America today, is that the government is not only the referee in the ring, but they’re the ones who are judging the fight at ringside,” Portage County TEA Party Executive Director Tom Zawistowski told Media Trackers.

“That’s called crony capitalism, and that’s what we’re really up against,” Zawistowski said.

Tesla Vice President of Corporate and Business Development Diarmuid O’Connell told Media Trackers that SB 260 was part of a larger battle being played out across the country, describing it as “pay-to-play.”

“Is it the proper role of government to prescribe a business model for any business, if it doesn’t affect health and safety and those core features? That’s basically what these laws, historically, have done: to prescribe a manner of selling cars,” O’Connell said. “The efforts of the folks who are promoting this bill are twisting that crank down even further.”

Tesla has taken federal funding, but in May 2013 made news as the rare “green” company to pay a loan back early as opposed to not at all.

SB 260 is currently co-sponsored by senators Troy Balderson (R-Zanesville) and Cliff Hite (R-Findlay), and has not yet been assigned to an Ohio Senate committee.

[Editor’s note, 01/30/2014: Corrected sixth paragraph to reflect that Patton’s SB 137 amendment was removed in House committee, not Senate committee.]