Tesla not gaining much traction in W.Va.
CHARLESTON, W.Va. -- A plan to revolutionize automobile sales has failed to gain traction in West Virginia so far.
Tesla Motors -- a company that manufactures luxury, electric cars -- hopes to streamline car sales by selling automobiles directly to customers. But West Virginian legislators and car dealers oppose that system.
They argue that Tesla's plan threatens West Virginian jobs -- in addition to being illegal. West Virginia law bans manufacturers from selling cars directly to consumers. Instead, it mandates that they buy cars only from the dealerships.
Tesla and its owner, Elon Musk, have challenged similar laws in other states.
The company manufactures "built-to-order" vehicles that customers design online. Tesla subsequently builds and ships the car directly to the customer just a few months after he or she placed the original order, thereby skipping car dealerships altogether.
Advocates for the model argue that built-to-order production could reduce vehicle prices. A report by Gerald R. Bodisch of the U.S. Department of Justice found that the cost of automobile distribution added an extra third to the price of a vehicle, and that built-to-order production could eliminate part of the excess cost.
But opponents hold that Tesla could threaten thousands of jobs provided by car dealerships across the state.
Ruth Lemmon, president of the West Virginia Automobile and Truck Dealers Association, said car dealerships provide nearly 6,000 jobs to the state economy. They also contribute 14.9 percent of the state's total retail sales, she said.
"We're doing everything we can to protect our dealers and employees," Lemmon said. "We would not just step down and not enforce our franchise law."
Gerald "Jed" Smith, owner of Smith Company Motor Cars in Charleston, said he not only provides local jobs, but also donates to Little League baseball teams, cheerleading squads and the University of Charleston, among other local charities and organizations. He questions whether a national company like Tesla would do that.
For now, Tesla does not appear to pose a serious threat to local dealerships.
According to Lemmon, West Virginians only own a few Tesla cars statewide. Furthermore, West Virginia does not have a Tesla store or service center.
Tesla customers would have to travel to Washington, D.C., for a service center said Tesla spokesman Patrick Jones. But West Virginians can still buy Tesla cars from the Washington location or online, Jones said.
Jones said Tesla has begun to see the demand for its cars expand rapidly nationwide. Should Tesla see the same demand from the West Virginian market, the company may one day bring a branch to Charleston, he said.
As Tesla has spread, the company has struggled with franchise laws from Virginia to Minnesota to Texas. In May, the North Carolina state Senate banned Tesla from selling cars online, but the state House of Representatives killed the bill.
West Virginia state Sen. Bill Cole owns two car dealerships in Bluefield, four in Ashland, Ky., and numerous franchise locations across the region.
The Mercer County Republican said he would consider any proposal from Tesla, but for now, he strongly believes that car dealerships are the best way to protect consumer interests.
At his dealerships, car buyers can test drive a new car and see whether groceries could comfortably fit in the trunk, Cole said.
Lemmon mentioned that dealerships provide critical maintenance and allow car buyers to trade cars for newer models. But Tesla spokesman Jones said his company's cars do not require the same servicing that Lemmon mentioned.
"Our Model S is completely different from traditional gasoline cars," Jones said. "Most of our servicing issues can actually be solved remotely, and this removes the need for customers to visit dealership locations."
Smith believes a locally owned dealership can often gauge and respond to local sentiment better than a national company.
"We can respond to the client quicker and faster than the manufacturer can," Smith said. "Without going through the factory and manufacturer, I can respond to my clients, to my community and to my colleagues immediately."
West Virginia's laws, Smith said, guard the customer from the whims of major manufactures and give the dealer enough autonomy that the manufacturer cannot run rough-shod over the client.
"It's going to be a fight for the franchise dealers to make sure that Tesla does not succeed," Cole said. Reach Laura Reston at email@example.com or 304-348-5112.