New York May Close Tesla Dealerships

By Douglas A. McIntyre Published Apr 28, 9:15AM EDT

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Tesla Inc. (NASDAQ: TSLA) faces a strong effort to shut down its dealers in New York.
Elon Musk’s alliance with President Trump gets the blame.

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Tesla Inc. (NASDAQ: TSLA | TSLA Price Prediction) had to fight in some parts of the United States to open dealerships. Traditional car companies did not want competition. They tried to force Tesla to sell its cars online. It is still in battle to have dealers in several states, including Wisconsin.

Tesla was recently hit by a strong effort to shut down its dealers in New York, its number six state based on sales.

According to The New York Times, the New York legislature sees the dealer attack as an attack on Elon Musk’s role in the Trump administration. The Times reports “Elon Musk’s alliance with President Trump has prompted Democratic lawmakers to propose stripping Tesla of its ability to sell its cars directly to consumers.”

The attempt by Democrats in the state legislature would turn Tesla’s five dealers over to its competition, which includes Rivian, Scout Motors, and Lucid. Each of these is much smaller than Tesla based on unit sales.

Tesla sells cars out of five dealers in New York state. State Senator Pat Fahy, a Democrat, is leading the effort to end that arrangement. “No matter what we do, we’ve got to take this from Elon Musk. He’s part of an effort to go backwards,” she said. According to BallotPedia, “The Democratic Party controls the offices of governor, secretary of state, attorney general, and both chambers of the state legislature.”

Fahy and her group have a strong ally. Other dealership networks want Tesla out of the dealership business to hamper its effort to compete with them directly.

Under Siege

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Tesla’s dealers in New York are already under siege, primarily due to Musk. On Earth Day, people attacked the New York City dealer with spray paint. Similar attacks have happened in other states.

The dealership challenge is part of a group of problems Tesla has in the United States. According to Morgan Stanley, in the first quarter of the year, Tesla’s market share dropped 8.5 points to 47.2%.

The harm done to Tesla’s brand by his alliance with President Trump may be hard to fix. Gordon Johnson of GLJ Research recently said that the damage that he’s done is “100% irreversible.”

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.