The Missouri legislature concluded its current session without voting on the bill that was restricting Tesla Motors, Inc.’s (TSLA) ability to directly sell its vehicles in the state. Though the bill was passed by the Senate, it needs the final vote from the Missouri House to become a law. This means that Tesla can continue to sell its cars in Missouri.
The original bill, HB 1124, had been in circulation since Dec 2013 and was passed by the House on Apr 17, without any ban on direct sales. It dealt with laws regarding all-terrain vehicles, recreational off-highway vehicles and utility vehicles.
Recently, the bill was passed by the Senate with altered language. While the present law restricts franchisors from competing against their franchisees, the amendment in the bill would prohibit direct selling by any auto manufacturer.
This would have hurt Tesla’s sales in the state as the automaker insists on avoiding middlemen. The electric carmaker believes that its direct-selling model reduces the price of vehicles and facilitates higher sales. It also helps in properly marketing its electric cars, as they are a relatively new technology.
Last week, the majority leader of the Missouri House revealed that he was not in favor of the bill. Tesla also received support from some staff members of the Federal Trade Commission, who believe that restrictive vehicle distribution methods will harm consumers.
Tesla has a service center in St Louis, MO, employing 15 people. To date, the company has invested $2 million in the state. The automaker intends to open a larger service center in Kansas City, MO, later in 2014, employing 15 people and thus investing an additional $1 million in the state.
Tesla currently carries a Zacks Rank #4 (Sell). Volkswagen AG (VLKAY), a Zacks Rank #1 (Strong Buy) stock, is currently performing well in the automobile industry.Read the Full Research Report on TM
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