Maryland Allows Direct Sales by Tesla

Tesla Motors Inc. is allowed to sell cars through four of its own retail stores in Maryland after Gov. Larry Hogan signed a bill making way for manufacturer-owned dealerships under limited circumstances.

This decision comes as Tesla's direct-sales model is also a topic in Michigan, which outlawed direct sales in October.

For several years, Tesla has had to battle car dealers in every state who are bent on making its manufacturer-to-consumer sales method illegal.

Maryland's law allows Tesla to operate four locations, and it is patterned after such other states as Ohio, Pennsylvania, New Jersey and Georgia, which have allowed the electric-vehicle maker to sell cars out of its stores as long as there is a cap. All these laws also narrowly focus what kinds of manufacturers are eligible so that they mostly are applicable only to Tesla.

Last week, the Federal Trade Commission's staff sent a letter to a Michigan state senator that urged him to include a provision in a bill he had sponsored that would allow Tesla to operate in Michigan. That bill seeks to open the door to direct sales for Elio Motors, a startup that is trying to launch a three-wheeled car that is expected to attain up to 84 miles per gallon on the highway.

At the time of the passage of the law, Gov. Rick Snyder said he hoped the legislature would address the issue again. A spokesman for the governor didn't respond Tuesday to a request for a response to the letter.

It isn't the first time the FTC has weighed in on the issue. The commission staff previously had written similar position pieces protesting the efforts by some states to restrict Tesla's direct sales efforts.

In many states, Tesla has come to an accommodation with dealers by agreeing to limit the number of stores in the state.

Tesla issued this statement in response to the FTC letter: "We agree wholeheartedly with the FTC. States should not limit how consumers buy their cars."

Maryland had only allowed "galleries" in the state, which are like showrooms for vehicles where the staff isn't allowed to try to sell the vehicles and can't handle any paperwork.

Texas, Arizona, Michigan and West Virginia all have laws prohibiting direct sales by manufacturers. The Texas legislature, which meets only every two years, has a House and Senate bill that would allow up to 12 retail locations in the state. But since its February introduction, little action has occurred on the bill.

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