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NC auto dealers say they'll keep fighting Tesla

Chris Kardish, Associated Press

RALEIGH, N.C. (AP) -- North Carolina auto dealers say they're moving ahead with a bill updating franchise laws without a provision that effectively bans the business model of electric car manufacturer Tesla.

But Bob Glaser of the NC Automobile Dealers Association said Thursday that the group hasn't given up on a separate bill targeting the automaker that already passed the Senate last month. The non-controversial provisions of that bill updating franchise dealer laws were tacked to an unrelated House bill earlier this week.

The Senate bill included a provision preventing manufacturers from direct online or phone communication with customers, which is how the California automaker sells its cars. Tesla has run into legislative barriers and lawsuits in other states as it attempts to bypass the franchise dealers who tightly control the retail market by selling directly to customers.

Tesla maintains its own showrooms but directs customers online to purchase one of its electric cars, which have earned near-perfect ratings from Consumer Reports. The company just recently turned its first quarterly profit and hasn't sold more than 100 cars yet in North Carolina.

Dealers in North Carolina and other states have argued the franchise system is more accountable to customers and the communities where they reside because dealers make more substantial local investments. Research into their lobbying efforts shows franchise dealers are extremely influential in large part because their businesses contribute greatly to the tax base of local and state governments.

The bill outlawing Tesla sailed through the Senate but hasn't moved in the House. Tesla has lobbied House members and taken Speaker Thom Tillis, R-Mecklenburg, for a test drive to curry favor. Tillis said after the test drive that auto dealers would have to make a "strong case" to prevent Tesla from operating in the state, because public policy should be working to encourage innovative domestic automakers.

Glaser said he doesn't expect the House to take up the Senate-passed bill outlawing Tesla's model before the General Assembly adjourns its regular yearly session this summer. But that bill will remain alive through 2014, Glaser said, and in the meantime he'll be encouraging the 700 members in his group to press their local lawmakers.

"It's not how many cars they've sold (so far)," he said. "It's the fact that it creates a different system outside the retail automobile distribution network that's been in place for 100 years."

Glaser said he'll continue talking with Tesla about changing the Senate bill in a way that would allow the company to operate in some form, but he couldn't say what that compromise will look like and Tesla couldn't, either.

"Given the issue is whether Tesla can transact online, it seems pretty straightforward, and we're not sure what a compromise would look like," said Shanna Hendriks, a company spokeswoman, in an e-mail. "We are pleased with the outcome of the legislative session this week and are grateful to the North Carolina legislature and governor for not precluding our ability to serve the consumers of North Carolina."