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Tesla Takes Dealer Fight to North Carolina

Colorado was the first state to take action against the manufacturer's stores, passing legislation in 2010 that halts their expansion. Since then, Minnesota lawmakers unsuccessfully pushed for a similar measure. In New York and Massachusetts, dealers have unsuccessfully sued to shut down the dealer's stores. In Virginia, a judge recently rejected Tesla's request for an exception to laws that prevent manufacturers from operating dealerships in most cases.

But the automaker can sell in every state because transactions legally take place in California. The North Carolina law, however, prevents customers in the state from making electronic purchases directly through manufacturers, said Diarmuid O'Connell, Tesla's vice president of business development.

"This would be the first place to my knowledge that Internet-based communications with our company would be circumscribed," he said.

The argument from dealers in North Carolina has mirrored those from the national association and dealers in other states: franchise dealers invest more locally, showing commitment to communities and customer service that Tesla can't match.

"It's a consumer protection," said Bob Glaser, president of the NCADA, "and why we say that is a dealer who has invested a significant amount of capital in a community is more committed to taking care of that area's customers."

Tesla has stepped up its advocacy in North Carolina with a Web campaign and a recent showing of its Model S just outside the Legislature. The demonstration drew lawmakers, their pages and passers-by, who almost uniformly marveled at the touchscreen dashboard and sleek design of the car.

Sen. Ellie Kinnaird, D-Orange, lauded the ingenuity of the car after watching it automatically start up when she sat down, but she said she doesn't regret joining the 47 other senators who voted unanimously for the bill.

"Dealerships are one of those basic industries that are the roots of a small town," she said. "The model convinced me that, while this is visionary, the reality is it has to evolve to a local presence."

Some have suggested a compromise that would allow Tesla a certain quota of direct sales without going through franchised dealers. But that isn't fair to other manufacturers, said Sen. Tom Apodaca, R-Henderson and the bill's sponsor.
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