After facing sales restrictions in New Jersey, Arizona and Ohio,
Tesla Motors, Inc.
) is now faced with challenges in directly selling its vehicles in
Missouri. Legislators are considering to impose a ban on direct
sales of vehicles to the public in the state. According to a bill,
customers can only purchase new vehicles through middleman
The original bill, HB 1124, has been in circulation since Dec 2013
and was passed by the House on Apr 17, without any ban on direct
sales. Recently, the bill was passed by the Senate with altered
language, which is entirely different from the original bill. The
original bill dealt with laws regarding all-terrain vehicles,
recreational off-highway vehicles, and utility vehicles. While the
present law restricts franchisors from competing against their
franchisees, the amendment in the bill would prohibit direct
selling by any auto manufacturer.
Tesla argues that the new law will help dealers to create a
monopoly. Earlier it was put forward that dealers play an important
role for the customers by taking care of warranty, recall and other
service-related issues with the manufacturer, which is lost in case
of direct sales.
Tesla offers its customers a relatively new technology which
provides sustainable transportation. Electric vehicles offer more
fuel efficiency and better emission standards compared to their
gasoline counterparts. It believes that direct sales reduce the
price of electric vehicles and facilitate higher sales.
Tesla has a service center in St Louis, MO, employing 15 people. To
date, the company has invested $2 million in the state. The
automaker intends to open a larger service center in Kansas City,
MO, later in 2014, employing 15 people and thus investing an
additional $1 million in the state.
The bill, which is passed by the Senate, needs to have the final
vote from the House. Tesla opines that the bill should be properly
discussed in public keeping consumer interest on priority, before
it is passed.
Tesla designs and manufactures electric vehicles and electric
vehicle powertrain components for partners such as
Toyota Motor Corp.
Tesla currently carries a Zacks Rank #5 (Strong Sell).
), a Zacks Rank #1 (Strong Buy) stock, is currently performing well
in the automobile industry.
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