Tesla is planning a “dealership” in Louisville. Kentucky law could complicate this. | In depth

LOUISVILLE, Ky. (WDRB) – In April, a Denver-based company that did real estate work for electric car giant Tesla submitted plans for a “vehicle dealership” in eastern Jefferson County.

Plans call for indoor and outdoor sales areas, service bays, over 200 parking spaces and the use of an existing building on Gateworth Way in Middletown.

But Kentucky law poses a complication, as it largely prohibits automakers from owning, operating, or controlling a dealership. Instead, that power rests with local franchises.

Tesla, however, has long resisted these local arrangements. It promotes company-owned stores and direct sales, as part of a strategy that co-founder and CEO Elon Musk said reflects Tesla’s unique technology and approach.

So what’s on offer at the approximately 4.5-acre site near Interstate 64 and Blankenbaker Parkway? It depends on who you ask.

Tesla did not respond to an email sent Friday morning asking for clarification on its plans.

But John Rougeux, president of the Tesla Owners of Kentucky club, said he believed the company was looking to open a service center, not a dealership. For now, Tesla owners in Louisville must travel to Cincinnati for service, although the manufacturer also has mobile technicians.

Middletown Mayor Byron Chapman also said he understood Tesla was not planning to open a dealership, but rather a store where owners can ‘pick up’ cars once they have purchased them. He said it was tentatively scheduled to open in the first half of 2022; it would replace a Harley Davidson motorcycle dealership that is considering a move.

The Kentucky Motor Vehicle Commission authorizes automobile dealers, manufacturers and distributors in the state. Carlos Cassady, executive director of the commission, said in an email that Tesla is currently not licensed or has no pending application.

But he said a service center wouldn’t need a commission license. Routine business approvals and licenses would be required for this, such as meeting local zoning requirements.

Tesla has been registered to do business in Kentucky since 2019. The property it is considering is already zoned for auto repair and sale, and a development plan for the property filed with Metro Planning & Design Services has been completed. approved.

Kentucky’s law prohibiting manufacturers from operating their own dealerships is not unique. Virginia has a similar law, which forced Tesla to apply to that state for special permission to open stores there.

In Virginia’s most recent case, Tesla requested an exception in state law that would allow it to open locations in Arlington, Charlottesville and Norfolk. At the end of last month, the commissioner of the state’s Department of Motor Vehicles granted the request after ruling that an independent dealership was unable to “make a profit by selling new motor vehicles. You’re here”.

Commissioner Richard D. Holcomb wrote that the two dealers who submitted proposals to sell Tesla vehicles have indicated that they would benefit from the parts sales and the financing increases.

“These revenue streams run counter to Tesla’s business model, a model that both dealers have said they will follow,” he concluded.

Kentucky law includes an exception similar to the one the company has used successfully in Virginia. Nothing in state law here prohibits manufacturers from setting up their own dealerships if the Motor Vehicle Commission finds that an independent dealer cannot sell the cars “in a manner consistent with the public interest.” .

A manufacturer can request this hearing.

The Kentucky Automobile Dealers Association said in a statement that it “would look forward to a franchise relationship with any new automaker seeking to do business in the Commonwealth; as long as that manufacturer complies with Commonwealth laws and regulations.

“We passionately believe that the franchised motor vehicle system has created price and service competition between brands and dealers of the same brand,” the statement said.

The press release also indicates that the association is “all-in” on electric vehicles and other alternative fuel vehicles.

“We will continue to monitor Tesla’s situation as things develop,” Association president Jason Wilson said in an email.

Copyright 2021 WDRB Media. All rights reserved.

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