The majority leader of the Missouri House is not in favor of the
bill which will restrict
Tesla Motors, Inc.
) from directly sell vehicles to customers in the state. Several
House members have expressed concerns about the bill.
Last week, Tesla revealed that some legislators added a provision
to a bill, which imposed a ban on the direct sale of vehicles to
the public in the state. According to the new provision of the
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, which designs and manufactures electric vehicles and
electric vehicle powertrain components for partners such as,
Toyota Motor Corp.
), 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. Tesla believes that direct sales reduces the price of
electric vehicles and facilitates higher sales.
The bill, which is passed by the Senate, needs to have the final
vote from the House. However, the House members believe that this
will restrict free market operation and lead to unintended
consequences. Thus, the majority leader does not plan to pass the
bill. This news should provide relief to Tesla, which has been
facing opposition to its direct-selling model in some states.
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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