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Leasing License Offers Tesla a Way Around Connecticut Law

The company has been rebuffed several times over the years in the General Assembly as lawmakers sided with the Connecticut Automotive Retailers Association that opposes Tesla dealerships.

by Stephen Singer, The Hartford Courant / December 19, 2019

(TNS) — Tesla Inc., which is barred by state law from selling in Connecticut, is instead leasing its electric vehicles from its Milford site.

The carmaker is in compliance with state law because it has a license to lease cars, Antonio “Tony” Guerrera, deputy commissioner of the Department of Motor Vehicles, said Wednesday.

“We are excited to announce that we are now able to offer leases to Connecticut residents from our Milford location," Tesla said in an email to its Tesla owners clubs. “Visitors can now speak with a Milford gallery adviser about electric vehicle technology and experience a demonstration drive if they are considering leasing a Tesla.”

According to Electrek, a news website, and confirmed by Richard Jordan, head of the Connecticut Tesla owners club, Tesla said in its email that a leasing location may offer leases, but may not conduct activities related to selling a motor vehicle.

"Because it is a manufacturer, Tesla is not eligible to apply for a dealer license under state law, but Tesla is eligible to hold a leasing license and thus is authorized to offer leases in Connecticut,” the carmaker said.

Tesla did not respond to an email seeking comment.

Tesla has been rebuffed several times over the years in the General Assembly as lawmakers sided with the Connecticut Automotive Retailers Association that opposes Tesla dealerships. The car dealers trade group says Tesla may open an auto dealership if it wants to sell cars in the state. But dealers say Tesla’s business model of selling directly to consumers would kill jobs and weaken consumer protections.

State law does not allow manufacturers to hold new-car dealer licenses, effectively calling for dealers to sell cars, SUVs and trucks.

Connecticut’s 270 auto dealers are responsible for more than 14,000 jobs, their trade group says. Dealerships have political clout because they do business in legislative districts and sponsor Little League games and other community activities and events.

Tesla and its supporters say the prohibition hinders innovation and new technology in Connecticut. Jordan, a Vernon resident and owner of a Tesla Model S, said the carmaker is “thinking outside the box. It’s challenging the norm.”

He dismissed the argument by car dealers that the state should adhere to their business model because it has worked for decades.

“We also used to go to work in a horse and buggy," Jordan said. "We used to get lights from whale oil. Technology moves forward.”

Jim Fleming, president of the Connecticut Automotive Retailers Association, said he believes leasing is little different from selling cars and that Tesla is violating Connecticut law.

The dealers group is headed to state Supreme Court, challenging Tesla over its attempt to sell cars from a Greenwich showroom. A Superior Court judge ruled in December 2018 that Tesla was illegally selling from its Greenwich gallery. The company said it opened the Greenwich gallery to educate Connecticut residents about Tesla’s electric cars.

The judge said if Tesla was not selling cars, "it’s difficult to see what it was engaged in at that location.”

A Department of Motor Vehicle hearing officer ruled in 2017 that Tesla’s activity at the Greenwich gallery required a license.

©2019 The Hartford Courant (Hartford, Conn.) Distributed by Tribune Content Agency, LLC.

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