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Tesla Takes Dealer Fight to North Carolina

By Chris Kardish

RALEIGH, N.C. (AP) -- Tesla Motors (TSLA) is fighting a bill in North Carolina that would effectively ban the company from selling its electric cars in the state, pitting it against auto dealers who say the car maker has an unfair advantage selling directly to consumers online.

It's the latest such battle for California-based Tesla, which like other car manufacturers must navigate a patchwork of state laws dictating how its vehicles can be sold. Nearly all states -- 48 -- require manufacturers to sell their vehicles through dealerships to ensure the companies don't undercut their own network of franchised dealers, the National Automobile Dealers Association says.

Tesla says it is cutting out the middleman by allowing people to view different options in a showroom, but then ordering the car direct from the company online rather than buying from a salesman. That approach also allows it to bypass state laws regarding franchised dealers, which have been in place for decades. However, lobbying groups say franchise dealers invest more locally and provide customer service that Tesla cannot.

The bill in North Carolina was mostly routine, simply updating the law governing the relationship between automakers and dealers. But it also changes the law to subject electronic sales to the same scrutiny. It has been unanimously approved by the Senate; the company is set to sit down with the state lobbying group for dealers, the North Carolina Automobile Dealers Association, to discuss a compromise that both sides say is unlikely to be reached.

Tesla doesn't yet have a showroom in North Carolina, where it has sold about 80 cars to date. The company recently announced the first quarterly profit in its 10-year history, around the same time Consumer Reports gave its Model S electric sedan a near-perfect rating.

Tesla operates 29 stores and galleries across 14 states and Washington, D.C. Customers can order a car online at a sales location or at home but not at galleries, which exist purely to showcase cars in states where auto dealers have launched suits or state law restricts the company from discussing sales in person.

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