Commentary More than 3,000 people in Connecticut own a Tesla, but you can’t buy one here — yet
Talk about irony. Tesla, the Silicon Valley maker of electric cars, has been clawing for five years to get into the lucrative Connecticut market in a big way. The avant-garde manufacturer of electric vehicles has lobbied to change state law that would allow the sale of Teslas direct to consumers. Shocking, I know.
Tesla-lovers have had to cross over the state line — name any nearby state — for the privilege of spending upwards of $50,000 and easily more on their car of choice.
This year things were lining up in a compelling way at the state Capitol. It wasn’t just Tesla that wanted to sell Teslas to Connecticut residents in Connecticut; well-respected environmental groups also were on board. Even the conservative Yankee Institute backed the move.
House Bill 7142 would “authorize the Commissioner of Motor Vehicles to issue a new or used car dealer’s license to an electric vehicle manufacturer.” In a hearing on the bill last week the testimony was overwhelmingly in favor of opening the new-car-lot gates to Tesla.
And then this happened.
Late last week Tesla CEO Elon Musk announced that the company was going straight to online sales. Closing most of its worldwide stores. What?
After half-a-dozen years, Tesla said to Connecticut — we don’t need your legislative changes anymore. We’ve got a different way to do business. And so it is in this Internet age.
It’s not just Connecticut, of course. The change in the sales model is worldwide. Most stores, who knows how many, will close as the company shifts to customers ordering online as they would for a book, or a case of wine, or a megabox of Pampers.
You couldn’t buy a Tesla in Connecticut
Al Gore III (yes, his father should have been president in 2000, I believe; his 36-year-old son didn’t talk about it.) came to Norwalk three weeks ago to make the case for opening the new car market to Tesla in Connecticut. Gore, policy and business development person for Tesla, was keeping stride with his father’s environmental footsteps.
With Rohan Patel, North American director for Tesla policy and business development; and Attorney Claire Coleman from the CT Fund for the Environment/Save the Sound, they met with the Hearst Connecticut Media Group Editorial Group — John Breunig, editorial page editor of The Stamford Advocate and Greenwich Time; Hugh Bailey, editorial page editor of the Connecticut Post and New Haven Register, and me — at Hearst state headquarters in Norwalk.
We had questions (not at all unusual for us, that’s our job); we were not easy on them.
Tesla — which is barred (unjustly) by state law from selling direct to customers from stores in Connecticut — has three toeholds here — a gallery in Greenwich, a service center in Milford, and an energy operations center in Rocky Hill — and lots of charging stations for the cars in convenient locations.
First, we need a bit of background on why you can’t walk into a dealership today in Connecticut and buy a Tesla. Then, I’ll part the curtain on our concerns expressed during the editorial board meeting. And let’s see where this electric-car journey takes us. Or, as Patel put it, what is the “range anxiety?”
You can’t buy a Tesla in Connecticut because state law prohibits manufacturers to sell vehicles direct to customers. The law was meant to protect franchise dealerships from being undercut by the cars’ makers. Tesla’s business model, however, is to sell straight to customers, without going through a dealership — Tesla has none.
“There is no incentive to sell a car,” Gore said of the Tesla sales team. They are paid hourly or with salary, not by commission.
Tesla’s sales approach differs from traditional dealerships also in that price is not negotiated, and there are no add-ons to finance rates or service warranties, Patel, who was an environmental adviser in the Obama administration, said.
Dealerships in the state tell a different story, of course. Chip Gengras, president of Gengras Automotive and an officer in the Connecticut Automotive Retailers Association, testified to the Transportation Committee against HB 7142 saying it would allow Tesla a “special unlevel playing field to sell cars in our state” and would “extend that privilege to hundreds of Chinese manufacturers that exclusively make electric vehicles.”
Gore and Patel touted the safety of Tesla cars. Patel told of engineers, in response to an accident, developing the software that would allow a parent to set a speed limit for the car driven by a teenager. This didn’t sit right with one of our board members, who felt uneasy with someone else controlling the car. What if the teenager needs to accelerate to avoid an accident?
I, for one, don’t mind parental controls on iPhones, video games, tv time — or the speed of cars.
Some people have “range anxiety,” Patel told us, meaning worries they might run out of electricity before reaching their destination. “The transition to an electric vehicle is a big one for most folks,” he said.
But already Tesla has installed 75 supercharger stalls at nine locations and 35 destination chargers in Connecticut, with nine more superchargers coming this year. The range is at least 240 miles on a charge. In many towns you’ll also see charging stations in public places, such as train stations or municipal parking lots. It won’t be terribly long before looking for a charging station is no more difficult than finding a gas station.
For me, price is an issue. I’m not paying (read that: can’t afford) mid-$80s for a Tesla Model S or X. Plenty of other people can, though; Tesla says it has more than 3,300 cars in Connecticut — all bought out of state. Think of the sales tax that’s gone to New York or Massachusetts. Ouch; we could have used that money.
The switch in strategies announced by Musk last week is designed to get the price for a Model 3 down to $35,000, a magic number making it more competitive with other electric vehicle brands. By closing store rooms and shifting to online sales, they’ve done it. Frankly, that’s still too expensive for my budget, but I’m glad it’s getting more affordable for others.
Will people be willing to make a substantial purchase second only to a mortgage (and maybe college education) entirely online? That’s a calculated risk, but shopping patterns do seem to be changing with millennials leading the way.
Zero Emission Vehicles and Electric Vehicles are the future on wheels. They’ve got to be, to reduce carbon emissions. Greenhouse gas emissions from transportation comprise nearly 40 percent of Connecticut’s total emissions, according to Coleman.
Connecticut’s goal to cut greenhouse gas emissions 45 percent from 2001 levels by 2030 can’t be reached without a paradigm shift.
“It’s untenable to talk about EV goals without letting Tesla sell in the state,” Gore said.
Benefits for all
The effect of Tesla’s new sales model on Connecticut operations now and in the near future are unknown. The company will convert stores to galleries, such as the one in Greenwich. There could be more.
“We will be increasing our investment in the Tesla service system, with the goal of same-day, if not same-hour service, and with most service done by us coming to you, rather than you coming to us,” Musk said in the media call last week.
Then there’s the sales tax question for online sales; answers are unclear.
What is clear is that the benefit of EVs is not just for rich people. Cleaner air is better for all. Proponents also argue that increased electricity use would translate to lower overall rates in general.
Tesla should be allowed to sell electric vehicles in Connecticut, whether the path was through HB 7241, which Gore said they still support, or online sales.
The state must be more forward thinking.
We’ve been sending customers north, let’s say for example, to buy a Tesla and why not legal weed while they’re at it. Sales taxes sliding through our fingers. How crazy is that.