SALT LAKE CITY — State lawmakers said Wednesday they hope to work out a compromise law this year that would allow Tesla Motors to start selling its electric cars at its $3 million showroom in Salt Lake City.
Two weeks before the showroom’s planned opening in March, the Utah attorney general’s office ruled that it couldn’t sell cars under state laws barring a manufacturer from owning more than 45 percent of any dealership.
Now, no one can buy, test-drive or discuss the price of a Tesla there, and the company says it’s losing money on the venture.
Utah lawmakers considered a bill earlier this year that would have changed that, but it died in March after running into opposition from existing car dealers and manufacturers.
At an interim meeting Wednesday of a legislative business and labor committee, West Jordan Republican Rep. Kim Coleman said she’s meeting with Tesla, dealers and other groups to find a solution that allows Tesla to operate while still satisfying the existing sellers.
Republican Gov. Gary Herbert has indicated he may ask the Legislature to take up the issue if lawmakers meet in an expected special session around August to discuss Medicaid expansion and the relocation of the state prison, Coleman said.
Lawmakers didn’t take any action Wednesday but said they want to find a fix and may follow up in August.
Tesla has faced similar roadblocks to selling its cars in a number of states with dealership laws like Utah’s. In some of those states, legislators have been looking at ways to tweak laws and let the company operate.
“This is something we really don’t want to be known for in Utah,” Coleman said Wednesday.
Jim Chen, the vice president of regulatory affairs for Tesla, told lawmakers Wednesday that before building the showroom, his company had conversations with Utah regulators where it was assured it would be able to sell cars. Chen also said the company’s interpretation of state law left Tesla to believe it would be cleared.
Several lawmakers on Wednesday criticized the company for spending millions on a project without getting any written approval.
Chen said the company trusted the advice it received in the conversations.
Tesla says it won’t use third-party dealerships because it is not only trying to persuade customers to buy an electric car, but in the process, convince them it’s better than an internal combustion engine car. That would be a conflict of interest for dealerships relying heavily on sales of traditional vehicles, Chen said.
Earlier this year, Coleman sponsored a bill that would have created a special dealership license that would allow companies like Tesla to avoid using franchises and sell directly to customers online.
Lawmakers said the bill was tailor-made for Tesla and needed more study. Existing car dealers worried it would upset their power balance with manufacturers who might use the new law to bypass them and start selling directly to consumers too.
Coleman didn’t offer details Wednesday about what a compromise would look like, but officials from Tesla, the New Car Dealers of Utah, the Alliance of Automobile Manufacturers and the Used Car Dealers Association all told lawmakers that they’re optimistic they’ll reach an agreement as they keep talking over the next few months.
For now, the Tesla showroom only offers service to any Tesla car that residents have purchased online or in other states.
