Ohio lawmakers are making a fresh attempt to outlaw the heart of Tesla Motors' retail model - company-owned dealerships - following an unsuccessful try in December. The proposal, Senate Bill 260, was introduced at the request of the Ohio Automobile Dealers Association, whose members see Tesla as a threat to a system in which nearly all dealers are independently owned franchises.

Ohio lawmakers are making a fresh attempt to outlaw Tesla Motors� retail model � company-owned dealerships � after an unsuccessful try in December.

The proposal, Senate Bill 260, was introduced at the request of the Ohio Automobile Dealers Association, whose members see Tesla as a threat to a system in which nearly all dealerships are independently owned franchises.

In a related matter, a Franklin County magistrate last week dismissed a lawsuit by the auto dealers association that sought to invalidate the dealership licenses that Tesla has obtained from the state, including the license for the Easton Town Center store that opened late last year. The decision can be appealed.

The new legislative proposal has the same wording as an amendment that lawmakers tried to insert into an unrelated measure in December, essentially banning Tesla�s way of doing business. After an outcry from the company, lawmakers said the issue would need to be debated.

Both the December amendment and the new bill were sponsored by Sen. Tom Patton, R-Strongsville.

�The state legislature, years ago, recognized having distinct roles for auto manufacturers and dealers fosters competition in the marketplace and provides consumers with a system of checks and balances to ensure that warranty and service issues are administered fairly,� he said in an email.

�Senate Bill 260 simply reinforces a standard set of rules for all manufacturers and dealers to follow, which benefits both the industry and consumers.�

The proposal would allow existing Tesla stores to remain open, which would include the locations at Easton and in Cincinnati.

Diarmuid O�Connell, Tesla�s vice president for business development, said the bill is seeking unfairly to �proscribe a business model for an industry� and is �protectionist in nature.�

Tesla, a California-based maker of all-electric cars, sells its vehicles online and through a network of dealerships that the company owns.

This retail model is different from the one used by major automakers such as Ford, Honda and General Motors, which sell their vehicles through a network of dealerships that are independently owned.

Dealers have fought Tesla in several states, arguing that the company�s model will open the door for major automakers to open company stores that will be unfair competition for franchises.

Tesla says there are bills or regulatory filings that oppose the company in Ohio and at least four other states: New Jersey, New York, Washington and West Virginia.

In nearly every state, laws say that an automaker cannot compete at the retail level with its independent dealers. Tesla is exempt from many of those laws because the company has no independent dealers.

�The dealers are trying to take a regulatory framework which was set up to protect dealers from (predatory action) from their manufacturers, and are trying to create a de facto monopoly,� O'Connell said.

So far, Tesla is not much competition for other dealers. The company reports that it sold 120 vehicles to customers in Ohio last year. Dealers have said they are concerned about the precedent Tesla is setting, rather than the brand�s actual sales.

Last Thursday, a Franklin County Common Pleas Court magistrate dismissed a lawsuit by the dealers that named Tesla and the state government as defendants. The dealers said that the state should not have issued dealer licenses to Tesla.

Magistrate Myron A. Thompson disagreed with this argument and said in his decision that the proper way for dealers to impose the restrictions they seek �is to lobby the General Assembly, as this is a legislative matter.�

dgearino@dispatch.com

@dispatchenergy