Transportation Committee approves bill to allow direct electric vehicle sales in CT

Photo of Paul Schott

The General Assembly’s Transportation Committee passed Wednesday, with broad and bipartisan support, a bill that would allow electric-vehicle manufacturers such as Tesla to directly sell their automobiles to Connecticut customers without operating franchised dealerships.

Supported by more than two-thirds of the committee, Senate Bill 127 represents the latest version of a long-debated proposal in the state legislature. State Sen. Will Haskell and state Rep. Jonathan Steinberg, the duo who introduced the bill, and other proponents argue that the legislation would respond to the state’s struggles to meet its electric-vehicle goals and expand consumer choice. But opponents have expressed concerns that the changes would hurt car dealerships and put consumers at risk.

“We’ve set a really ambitious goal in this state to put 500,000 electric vehicles on the road by 2030, but sadly we’re nowhere close to meeting that goal. We’ve got just over 13,000 electric vehicles on the road,” Haskell, D-Westport, the committee’s Senate chairman, said in the committee’s online meeting Wednesday. “Many of us think this state should be doing everything it can to make it easier, more convenient to get behind the wheel of an electric vehicle, and instead our state laws do just the opposite. We force people who want to buy a Tesla, Rivian or Lucid to go out of state to make that purchase.”

SB 127 would allow electric-vehicle manufacturers to obtain new or used-car dealer licenses in Connecticut — so long as they adhered to requirements including them not having franchise agreements with any new car dealers in the state and selling at retail only vehicles manufactured by their companies. Among other stipulations, EV makers would also have to comply with certain conditions on their ownership structure.

“I think most people are going to prefer the dealership model, but that’s not really what we’re talking about here. We’re talking about consumer choice,” said Steinberg, D-Westport. “From a clear competition standpoint, this is about letting the market work. This is not about un-leveling the playing field.”

Committee members who voted against the bill, however, were unconvinced by the bill’s consumer-protection provisions.

“We’re opening this door of not protecting our consumers,” said state Sen. Henri Martin, R-Bristol. “Right now, if there is something that is wrong with their car, it is to the best interests of the dealer to take care of that car — particularly when it deals specifically with an issue that comes right out of the manufacturer.”

Other members who voted against the bill also cited the concerns about its potential impact on franchised car dealerships, a group that has resoundingly rejected the legislation.

“I do think that we’re changing the rules for certain very high-end cars and we are risking thousands and thousands of jobs that we have here in Connecticut, according to our auto dealers,” state Sen. Heather Somers, R-Groton, one of the committee’s ranking members. “I think it is critical right now, especially in the fact that we’re just coming off a pandemic, that we support the businesses here in the state of Connecticut.”

But the voting did not go along party lines. State Sen. Steve Cassano, D-Manchester, was one of the Democrats who voted against the bill.

“Dealerships are a vital part of Connecticut’s whole future — its economic future particularly. And to me, that’s the driver,” Cassano said. “I don’t know why Tesla just doesn’t open a dealership.”

At the same time, some GOP members such as state Rep. Tom O’Dea, R-New Canaan, supported the bill, but with some reservations.

“I would like to see some efforts made to improve the (dealership) franchise law,” O’Dea said. “We need to protect our dealerships.”

Votes on SB 127 by the full state House and state Senate have not yet been scheduled.

In the past few years, the legislature has considered other bills to allow electric-vehicle manufacturers to sell directly, but none of those proposals have passed.

“The bill will be subject to further discussion, and I’m eager to continue soliciting feedback from colleagues about how we can improve the legislative language,” Haskell said in a statement after the committee’s vote. “However, I believe this issue warrants swift action, and hope it will soon reach the House and Senate floors. After all, the General Assembly has been talking about this bill for years. Isn’t (it) time that we settle this issue once and for all?”

Divided opinions on direct sales

Tesla supports the bill. The Palo Alto-Calif.-based company dominates the market, having accounted for 70 percent of the state’s registered electric vehicles at the end of 2019, according to the state Department of Energy and Environmental Protection.

There is one Tesla location in the state, a leasing and service center at 881 Boston Post Road in Milford. The company maintains brick-and-mortar establishments in about 30 states. None of its locations are franchised dealerships, as the company has always rejected that sales framework.

The firm operated a gallery in Greenwich from 2016 to 2019, whose operation set off a lengthy legal battle.

If the legislature passed the bill, Tesla would have “every intention” of opening sales locations in Connecticut, Tesla senior policy adviser Zachary Kahn said during a Transportation Committee hearing last month.

Other electric-vehicle makers such as Lucid Motors and Rivian also support the bill.

But the Connecticut Automotive Retailers Association, which represents Connecticut’s 270 new-vehicle dealerships, strongly opposes the legislation.

“The companies pushing this bill can already do business in Connecticut but want to bypass Connecticut law, a law which provides consumers with guarantees and safeguards,” CARA President Sarah Fryxell said Wednesday, after the vote. “All Connecticut new auto dealers are enthusiastic about selling EVs, and many of the 45 EVs on the market today are for sale locally at Connecticut dealerships. This bill gives special treatment to out-of-state corporations at the expense of local business.”

Widespread agreement about the need to put more electric vehicles on the road reflects, in part, major environment concerns. Connecticut suffered from “some of the worst air quality in the country” and that the transportation sector accounted for 38 percent of the state’s greenhouse-gas emissions, according to an EV “roadmap” published last year by DEEP.

pschott@stamfordadvocate.com; twitter: @paulschott