EV Direct Sales Banned In New York, Tesla Using This Loophole To Get Around Law

Electric vehicle giant Tesla Inc TSLA has had to deal with increased competition in the sector over the years and with states and countries that don’t seem ready to see mass adoption of electric vehicles.

What Happened: Several states have laws in place that prohibit automakers from selling electric vehicles directly to customers. Tesla has used a loophole to get around this issue in several states and will utilize it once again.

The state of New York prevents the sale of electric vehicles directly to customers without using third-party dealerships, as reported by Electrek.

The loophole utilized by Tesla is to set up on land owned by Native American tribes, similar to how some casinos operate in states.

A report from Syracuse News said Tesla will open a 25,000-square-foot showroom on land owned by the Oneida Indian Nation.

Tesla utilized the same loophole in 2021 for the state of New Mexico where it opened a store and service center inside an old casino near Santa Fe. The automotive company partnered with the First Nation of Nambe Pueblo to open the location on tribal land and circumvent the state’s law.

The new location is expected to open in 2025 and will be Tesla’s first direct sales location outside of the New York City area in the state.

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Why It’s Important: The law in New York is old and one that was done to protect car dealers from having the automotive companies open their own dealerships and undercut or offer exclusives to hurt them.

Traditional automakers such as Ford and General Motors have a network of dealerships operated by third-party dealers throughout the U.S., giving them access to offer electric vehicles for sale in the states.

Tesla was able to open several stores and service centers in the New York City area thanks to an exemption it previously received. The company has fought to get extensions to expand to other areas of the state with no luck.

By using the loophole, Tesla gets a leg up on expansion efforts without needing to get the state involved in changing old laws or fighting against dealerships attempting to block out the competition.

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Photo: Courtesy Tesla Inc.