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Proposal would let Tesla sell directly to Marylanders

You can charge your Tesla in Hagerstown, Baltimore and Salisbury, you can get it serviced in Rockville and you can ogle the sleek, sporty-looking models at the company’s gallery in Bethesda’s Westfield Montgomery mall – even sit in them.

“But the minute you ask a question concerning price or purchase or anything related to an actual sale of the car,” says Del. Kirill Reznik, “they can’t talk to you anymore.”

That muzzle stems from state law that says only licensed franchise dealerships – not manufacturers — may sell vehicles to consumers. The Democrat from Montgomery County introduced a bill in Annapolis last week that would upend that restriction, with some restrictions of its own: Only companies that exclusively make non-fossil-fuel-burning vehicles can become licensed dealers in Maryland.

Tesla Motors is fending off legal challenges and faces similar legislative limitations in a number of states, many backed by franchise car dealers. Late last month, the Missouri Auto Dealers Association filed suit against the state Department of Revenue for letting Tesla sell its electric cars through two storefronts there, according to the St. Louis Post-Dispatch.

But only a handful of states besides Maryland appear to have banned direct Tesla sales outright. The industry publication Automotive News, which tracks Tesla-related legal developments by state, says Tesla retailers are also barred from Iowa, Michigan, New Jersey, Texas and Arizona.

There’s clearly a market for Tesla products in Maryland, Reznik said – a niche one for the pricey luxury cars, but one with some foothold. Reznik says the Motor Vehicle Administration has nearly 500 Tesla vehicles registered, and he emphasizes that the company chose to locate its regional service center in Rockville.

Marylanders in the market for a Tesla can buy one in D.C. or Pennsylvania, or just order one online.

“But if that market exists here,” Reznik says, “why wouldn’t we be putting Marylanders to work for a company that pays their employees well, that is in a long-term commitment to building infrastructure. … Why can’t we just do it here?”

Reznik is quick to clarify that his bill is not meant exclusively for Tesla’s benefit, though it would be immediately able to take advantage of the legislation, and he is working with Tesla representatives to build local advocacy. But the larger goal is to make easy for any electric-car company to do business in Maryland.

“If we do it that way, we could potentially open the door for a great deal of automotive innovation in our state,” he said.

The bill language hews pretty closely to what Peter Kitzmiller, president of the Maryland Automobile Dealers Association, says he envisions for an acceptable Tesla exception to the rule. The group, which represents 98 percent of new car dealers in the state, met with Reznik before the bill dropped, and Kitzmiller says they’ll be reviewing it and offering changes.

The group wants to ensure the exception is clear and limited, Kitzmiller says, and is studying similar exceptions made in other states – for instance, the bill signed into law last summer in Pennsylvania that lets Tesla operate just five storefronts.

The franchise dealer-only law protects against unfair competition, Kitzmiller says, and benefits consumers as well as dealers, though others see it differently: Last year, some federal regulators called these types of laws “protectionist” and “regulatory impediments.”

But Reznik insists his aim is to leave the dealer sales model intact, instead carving out a specific exception. And Kitzmiller concedes that Tesla has a point: The company doesn’t work with dealerships, and therefore wouldn’t be infringing on their market.

“As long as they comply with the same licensing rules that a dealer has to comply with, then I think we’re going to be able to work something out,” Kitzmiller says.

About Anna Isaacs