Tesla Inc. (NASDAQ: TSLA) had to fight in some parts of the United States to open dealerships. Traditional car companies did not want competition. They tried to force Tesla to sell its cars online. It is still in battle to have dealers in several states, including Wisconsin.
Tesla was recently hit by a strong effort to shut down its dealers in New York, its number six state based on sales.
24/7 Wall St. Key Points:
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Tesla Inc. (NASDAQ: TSLA) faces a strong effort to shut down its dealers in New York.
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Elon Musk’s alliance with President Trump gets the blame.
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According to The New York Times, the New York legislature sees the dealer attack as an attack on Elon Musk’s role in the Trump administration. The Times reports “Elon Musk’s alliance with President Trump has prompted Democratic lawmakers to propose stripping Tesla of its ability to sell its cars directly to consumers.”
The attempt by Democrats in the state legislature would turn Tesla’s five dealers over to its competition, which includes Rivian, Scout Motors, and Lucid. Each of these is much smaller than Tesla based on unit sales.
Tesla sells cars out of five dealers in New York state. State Senator Pat Fahy, a Democrat, is leading the effort to end that arrangement. “No matter what we do, we’ve got to take this from Elon Musk. He’s part of an effort to go backwards,” she said. According to BallotPedia, “The Democratic Party controls the offices of governor, secretary of state, attorney general, and both chambers of the state legislature.”
Fahy and her group have a strong ally. Other dealership networks want Tesla out of the dealership business to hamper its effort to compete with them directly.
Under Siege
Tesla’s dealers in New York are already under siege, primarily due to Musk. On Earth Day, people attacked the New York City dealer with spray paint. Similar attacks have happened in other states.
The dealership challenge is part of a group of problems Tesla has in the United States. According to Morgan Stanley, in the first quarter of the year, Tesla’s market share dropped 8.5 points to 47.2%.
The harm done to Tesla’s brand by his alliance with President Trump may be hard to fix. Gordon Johnson of GLJ Research recently said that the damage that he’s done is “100% irreversible.”
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