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Tesla Motors seeks direct sales in Arizona

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PHOENIX – Once Margaret Dunn saw the Tesla electric car at a storefront in Scottsdale Fashion Square, she said she went back about six times to look at it.

But then the CEO of Dunn Transportation found out she couldn’t test drive or buy the car in Arizona.

That irked her.

“It is extremely antiquated that we have a law in our state that does not support free market,” said Dunn, who purchased her Tesla online.

Dunn, and host of other Tesla fans, support a bill moving through the state Legislature that would allow motor-vehicle manufactures like Tesla to sell directly to consumers.

State law prohibits factories from selling vehicles directly if they don’t have an established business relationship with a dealer and don’t have an Arizona service center.

That means consumers here must buy the vehicles from a third party-vendor, such as an independently franchised dealership, drive to another state or purchase it online. Tesla has the Scottsdale store, but employees can only show the vehicle.

The House Commerce Committee on Wednesday moved HB 2216
forward. It now goes to the House transportation and infrastructure committee.

Bill sponsor state Rep. Warren Peterson, R-Gilbert, said that for him, the bill is “a choice of individual freedom.”

This bill is similar to one that failed a year ago, but Tesla officials said they hope legislators this session will be more open to what it defines as a free market.

The fight over direct sales is not unique to Arizona, and recent legislative battles have occurred in New Jersey, Michigan and Texas.

Officials with the Automobile Dealership Association said that unproven cars, like Tesla, don’t deserve special treatment. They said this bill would overturn an entire system that has served Arizona for decades.

Arizona car dealers employ about 24,000 Arizonans and collected $1.8 billion in sales taxes in 2013, according to the association.

Bobbi Sparrow, president of the automobile association, said the bill would make Tesla “a complete vertical monopoly.”

The bill is anti-competitive because manufactures could own all sales points and establish the price without competition. The independent dealers structure, however, provides price competition, according to the association.

David Leibowitz, a spokesman for Tesla, said the company sells about one car a day in Arizona and 37,000 cars annually in U.S., which he said is hardly a threat that would destroy the auto dealers network.