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May 24, 2017

Tesla pledges 10 CT stores, dealerships doubtful

Tesla A Tesla Model 3, which the company claims has drawn "thousands" of reservations in Connecticut.
By Matt Pilon

In the waning weeks of the legislative session, electric vehicle manufacturer Tesla is pledging to open 10 stores in Connecticut by the end of 2018 if lawmakers approve a bill that would allow the company to sell its cars directly to consumers.

It’s the first time the company has divulged the number of stores – which would be sales and maintenance facilities – it would open in Connecticut, where the company has made two previous unsuccessful attempts to change state law.

Diarmuid O’Connell, Tesla’s vice president of business development, said in an interview with the Hartford Business Journal that each of the 10 stores would “conservatively” employ 25 full-time workers.

“We’re talking 250 jobs in the near term,” O’Connell said, adding that some locations could employ as many as 50 people.

Tesla sells its cars directly to consumers, without using dealerships as middlemen, a practice outlawed in Connecticut. That means Connecticut residents, like those in a handful of other states, must leave the state to purchase a Tesla vehicle.

The promise to open up to 10 new stores is the latest move in a recently intensified lobbying effort by Tesla. The company this month registered a state political action committee, released a Greenberg Quinlan Rosner poll showing that 74 percent of Connecticut residents “strongly” or “somewhat” support allowing direct sales in Connecticut. To top it off, Tesla CEO Elon Musk penned a letter to the editor in the Hartford Courant last week.

Iterations of previous failed bills that would have allowed Tesla to sell its cars directly to consumers called for a three-store cap, but the current language of House Bill 7097 has no such limits.

O’Connell said Tesla believes the “thousands” of Connecticut purchase reservations for its more affordable Tesla Model 3 vehicle (which will start at a base price of $35,000) shows there’s plenty of demand to support 10 stores here.

O’Connell said Tesla would be willing to limit its footprint to 10 stores, framing the number as a potential “good-faith” compromise with auto dealerships, which have fiercely opposed Tesla’s advances in the state over the past several years.

Jim Fleming, president of the Connecticut Automotive Retailers Association (CARA), which has led the charge against the Tesla bills, was dismissive of the electric car company’s proposal.

Fleming noted that New York, a larger market, only has five Tesla stores.

“If they were to build 10 stores, I would be surprised,” Fleming said.

Regardless of the number, Fleming said CARA’s position remains that Tesla should engage with the state’s franchise dealership system. ”I’ve got a bunch of dealers in Connecticut that would take that franchise,” he said.

He said the average franchise dealership employs 52 people and invests more in renovations, which leads to local property tax revenue.

CARA also argues that dealerships would be forced to lay off 10 percent of their 14,000-person workforce if the bill passes.

“If this is about creating jobs in Connecticut, the Tesla bill as they’ve proposed it is a loser,” he said.

A report this month by the Acadia Center disputed those job-loss concerns, finding that New York, Massachusetts and New Jersey have experienced “no evident decline in dealership jobs” since they started allowing direct sales.

Asked about the report, Fleming predicted those job losses will come with time.

Currently, Tesla does have a maintenance shop in Milford with two dozen employees, as well as a Greenwich “gallery.” It’s also grown its Connecticut network of high-speed charging stations, or “Superchargers,” including a recent installation at the Connecticut Post Mall in Milford.

A year ago, after a Tesla bill passed the House but was stuck in the Senate, Tesla dangled the prospect of a 150-job regional distribution center in Connecticut. The offer came just two days after Senate Majority Leader Bob Duff (D-Norwalk) indicated he was unable to corral enough votes to get the bill through his chamber. Duff criticized Tesla at the time for its last-minute offer, CT News Junkie reported at the time.

This year’s bill hasn’t made it through either chamber, and Duff recently indicated uncertainty about its chances.

Asked Tuesday if Tesla worried about the bill and is dangling a fresh incentive to spur lawmakers to act, O’Connell insisted “there’s no parallel” with last year.

The legislative session ends June 7.

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