Tesla Motors Inc (NASDAQ:TSLA) has been dealt a major blow in West Virginia, after the state’s Governor, Earl Ray Tomblin, signed a legislation that bars it from selling cars directly to consumers. The signing of the legislation comes after weeks of debate in the state’s legislature. West Virginia is the fifth state to ban the direct sales that Tesla heavily relies on for sales.
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Similar laws have already been passed in Michigan, but Tesla Motors Inc (NASDAQ:TSLA) won big when a similar ban was overturned in New Jersey as the Garden State is considered one of the largest markets for expensive cars. West Virginia is a small market, but lifting of the ban could have given the company access to surrounding areas like Ohio, Virginia, and Washington DC.
The bill had been championed by Senate President Bill Cole, who himself is a dealer in his home state. Tesla Motors Inc (NASDAQ:TSLA) in a statement after the legislation stated that the bill prevents fair competition in the state while protecting the car dealer monopoly. The automaker affirms that customers in the area have the right to choose from whom they want to buy from, reiterating that it will be returning next year to fight for consumer choice and free market choice.
The final approved bill states that a manufacturer may not in any way act in the capacity of a vehicle dealer or operate a dealership. The bill also bars Tesla Motors Inc (NASDAQ:TSLA) from displaying its cars with a view to selling them other than through franchised dealers unless the display is part of an auto show. Tesla had proposed an amendment that would have allowed it to open stores but the same was turned down.
The nation’s dealership lobby group affirms that the existing system gives customers the much-needed flexibility on pricing while ensuring local competition for business. Tesla Motors Inc (NASDAQ:TSLA) has now been reduced to operating the so-called ‘galleries’ in a number of states where customers can only see cars but may not order discuss prizes or take test drives.
Shares in Tesla Motors Inc (NASDAQ:TSLA) shares will open on Monday at $191. In the last five day’s the firm’s shares have gained a fraction.