Skip to main content

North Carolina may ban Tesla’s direct-to-customer sales scheme

Tesla StoreTesla Motors’ unorthodox retail store business model is creating a lot of controversy. The EV manufacturer has already fought dealer associations and state legislatures from Massachusetts to Texas, and now the battle is moving to North Carolina.

A proposal in the North Carolina state legislature would make it illegal for Tesla, or any other carmaker, to sell directly to customers, the state’s News & Observer reports.

The measure, which is supported by the North Carolina Automobile Dealers Association, was approved by the state Senate’s Commerce Committee last week.

If the proposal becomes law, Tesla would be forced to change its sales strategy or stop selling cars in the Tar Heel State.

Instead of selling cars through conventional dealers, Tesla opens Apple Store-like spaces in malls and shopping centers, with all transactions conducted over the phone or online, and routed through the company’s California headquarters.

That last part has allowed Tesla to dodge claims that it is opening its own dealerships, which is illegal in most states. The Tesla Stores don’t actually sell (or service) any cars in states where that practice is illegal; they direct customers to online ordering and standalone service centers.

However, North Carolina’s legislators are claiming that any direct sale that cuts car dealers out of the loop, whether it takes place in a physical showroom or online, is against the law. Tesla doesn’t have any mall stores in North Carolina, only service centers.

“They’re trying to insulate the dealer franchise model from any competition,” Tesla vice president for corporate and business development Diarmuid O’Connell said during a visit to Raleigh, “It’s a protectionist move to lock down the market so we have to go through the middleman – the dealer – to sell our cars.”

As with previous cases, the North Carolina car dealers argued that Tesla’s Apple-style sales model would set a precedent for corporate dealerships, leaving customers to deal directly with large car companies instead of a local franchisee.

“The whole point of the retail system is to protect the consumer,” Robert Glaser, president of the North Carolina Automobile Dealers Association, told the News & Observer.

So far, 80 North Carolina residents have put Model S electric sedans in their driveways.

Tesla Model SThe Tesla Stores have attracted controversy literally from the beginning.

Tesla opened its first location in White Plains, New York last year, angering the state car dealer association. Similar protests soon came out of Massachusetts and Oregon.

Last September, Tesla was notified by the Illinois Secretary of State’s office that listing company CEO Elon Musk as the owner of a Chicago store was illegal.

In April, Tesla also drew fire from Texas legislators examining the legality of two stores in the Lone Star State. Musk fired back with an offer to produce electric pickup trucks in Texas.

Tesla currently has 28 stores in 13 states.

Is Tesla breaking the law – or should the law be changed? Tell us in the comments.

Stephen Edelstein
Stephen is a freelance automotive journalist covering all things cars. He likes anything with four wheels, from classic cars…
The Kia EV3 could be the cheap electric SUV we’ve been waiting for
White Kia EV3

The Kia EV9 was already one of the cheapest ways to get an electric SUV, but now the company is taking things to the next level. After teasing the Kia EV3 last year, the car is now official.

The EV3 is built to be a slightly smaller, cheaper version of the EV9 -- following the path of the Rivian R2, which arrived after the Rivian R1S. It's certainly not as technologically advanced as the EV9, but it still looks unmistakably like a modern Kia, and is clearly a sibling of the larger SUV. On the outside, the vehicle has the same split taillights and very similar Tiger Face front. But it is quite a bit smaller. The vehicle will be available in nine finishes -- however only "Aventurine Green" and "Terracotta" are being announced right now.

Read more
Kia EV3: release date, performance, range, and more
White Kia EV3

Kia is on a roll. Hot on the heels of the success of the Kia EV6 and EV9, the company is already announcing what could be its cheapest electric vehicle yet -- the Kia EV3.

The Kia EV line seems to follow the rule of lower numbers indicating a lower price — and if so, the EV3 will end up being the cheapest electric car Kia has released to date. That, however, thankfully doesn’t mean that the EV3 will be a low-end car — it just means that Kia may be pushing the boundaries on electric car pricing.

Read more
Kia EV3 vs Tesla Model Y: Can Kia’s new entry-level car take on Tesla?
White Kia EV3

The Kia EV3 is finally coming, and it could well end up being the best small-size electric SUV to buy when it finally rolls out. It's smaller than the Kia EV9, but it offers many of the same design elements and features. But there's another small-size electric car that's currently one of the most popular vehicles out there -- the Tesla Model Y.

How does the Kia EV3 compare with the Tesla Model Y? And is one vehicle actually better than the other? We put the Kia EV3 and the Tesla Model Y head-to-head to find out.
Design
The design of the Kia EV3 is very different than that of the Model Y, though they're both reasonably good-looking vehicles.

Read more