Proposed bill would clear path for Tesla sales in Utah

Posted at 6:17 PM, Mar 04, 2015
and last updated 2015-03-08 01:56:23-05

SALT LAKE CITY -- A brand new car dealership is built and ready for a Friday grand opening.

There's just one problem: The Tesla Motors dealership on 2312 South State Street in South Salt Lake is illegal.

State law says all new car sales have to be completed through a franchisee, which is why Utahns are as familiar with the name Ken Garff as they are with the name Henry Ford.

And car dealers say the franchise system works, setting up a friendly middleman between the big corporation and the small buyer.

"That's the best balance between the manufacturer and the dealers and the public," said Craig Bickmore, executive director of the New Car Dealers of Utah.

But the Tesla dealership is an example of the changing landscape in all retail sales, with car sales lagging behind the trend, says State Representative Kim Coleman.

The West Jordan Representative is sponsor of House Bill 394, which allows manufacturers to sell cars online without a franchise in the middle. The bill would allow the Tesla dealership in South Salt Lake to open as the place where Utah customers pick up the car they buy online.

"People who want a Tesla, who want one of these cars, are going to other states to purchase them, so we'd like to have that business here in Utah," Coleman said.

Auto dealers represent a big portion of Utah's tax base, accounting for about 17 percent of Utah's sales tax revenue, Coleman said.

But the car dealers say Tesla, in particular, are a poor example of corporate contributions to the state tax base, because the all-electric cars are subsidized by tax credits.

"With every Tesla sold there's a tax subsidy by the public, by the government, which we subsidize to the tune of, to the low side, 20 thousand [dollars] and to the high side, 35 or more thousand [dollars]," Bickmore said.

H.B. 394 has yet to receive a vote in the House of Representatives.

NOTE: Since the original publication of this report, Tesla Motors contacted Fox 13 to rebut Bickmore's statement about subsidies for Teslas, saying in part:

"The consumer (not Tesla) is eligible for a $7,500 federal tax credit. That is the only subsidy of any kind associated with the sale of Model S.

What Bickmore may be referring to is ZEV (zero emission vehicle) credits that are traded amongst manufacturers. Tesla, like Ford, Toyota, Honda, and Mitsubishi earn revenue from the surplus of credits they have and sell to other manufacturers."