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‘Tesla Bill’ Offers NM Motorists New Choice

on January 27, 2019 - 12:40pm
Sen. Gerald Ortiz y Pino
 
By Sen. Gerald Ortiz y Pino
Sponsor of Senate Bill 243
 
The sale and service of vehicles is not a very exciting topic but it is an important one.
 
Many motorists have bought a car from a dealership. There are more than 110 new-car dealerships in New Mexico that employ some 7,000 people. Some dealerships have occupied the corners of your towns for decades, and while there has been a consolidation in car dealerships resulting in out-of-state ownerships, many will continue to thrive for decades to come.
 
I have introduced Senate Bill 243, Motor Vehicle Manufactures as Dealers, to ensure that New Mexican auto dealers continue to benefit from the franchise relationship they have with their manufacturers, while also allowing non-franchised car manufacturers to invest in New Mexico by selling and servicing vehicles locally. It is more commonly referred to as “The Tesla bill” because it is modeled on legislation that nearly 20 other states have now enacted to permit electric-vehicle manufacturers to sell directly to prospective buyers without utilizing a franchised dealer.
 
The franchise system evolved to protect local dealerships from being put out of business by their own manufacturers. However, Tesla uses a different distribution model – one without franchises. Thus, New Mexicans currently must go out of state to buy a Tesla. Because we’ve failed to update our laws to accommodate new and emerging businesses that choose a different model than the franchise system, we are hurting ourselves unnecessarily.
 
Tesla is an American manufacturer with a simple yet challenging mission: to accelerate the world’s transition to sustainable energy. By law, Tesla is forbidden from investing in service and sales centers here in New Mexico because they do not distribute their vehicles through a franchise model. There are numerous reasons why they choose to do this, and they are justifiable business choices – mainly to educate customers about electric vehicles.
 
Franchise dealers mostly profit from servicing vehicles throughout the automobile’s lifespan. But Tesla services their customers’ vehicles at cost, something not possible if they operated under a franchise model. At Tesla, there is no haggling over price as it’s the same whether you buy it in Phoenix or Shanghai. And Tesla makes no money by financing vehicles, a major profit center for most franchise dealers. Based on consumer satisfaction ratings that place Tesla at the top of the industry, it’s apparent that their customers certainly appreciate the company’s new approach to the automobile industry.
 
It seems to me that our state should not dictate how a business chooses to distribute its product as long as New Mexico consumers are reasonably protected. Senate Bill 243 will bring Tesla into the same legal structure, save for the franchise model itself, as all other auto dealers. It also allows for the local servicing of vehicles that customers have had shipped to them from out of state. Currently New Mexican Tesla owners must have their vehicle towed to Denver for any significant service. Our auto-franchise law, in effect for many decades, creates a drastic inconvenience to current and potential Tesla customers.
 
This new common sense legislation would help consumers, and bring new jobs and investment to New Mexico. For dealers and manufacturers who prefer to follow the franchise model, it would make no change whatsoever. It simply increases options for New Mexicans seeking to purchase all-electric vehicles.

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