Tesla brings native land loophole to New York to avoid dumb direct sale ban

Tesla is going to repeat a loophole it has previously used to open stores and service centers where direct sale laws prevent it by operating on native land. This time, the automaker is doing it in New York.

There are a few states in the US that have laws prohibiting direct sales of electric vehicles to the public without going through third-party dealerships.

These bans come from old laws that were meant to protect car dealers from their own automakers supplying the vehicles.

The idea is that automakers couldn’t open a company-owned store next to a third-party dealer after they have made the investment to sell and service their cars. It would be unfair competition.

Now, however, car dealerships are using those old laws to prevent automakers that never had deals with third-party franchise dealers, like Tesla, from selling their vehicles to the public, even though it’s fair competition. Tesla has been fighting those laws in many states with some success.

In New York, the law still exists, but Tesla managed to get an exemption to open a few stores and service centers, even though its bid to expand has been curtailed by the local dealership association.

In New Mexico, Tesla found an interesting way to get around the direct sale ban. In 2021, Tesla managed to open its first store and service center in the state by opening inside an old casino north of Santa Fe, and it did it by partnering with the First Nation of Nambé Pueblo and opening the location on their tribal land.

Last year, the automaker did it again to open a second location in the state.

Now Tesla is taking the loop to New York. Syracuse news reports that Tesla made a deal with Oneida Indian Nation to build a location (pictured above) on their land:

The 25,000-square-foot showroom is planned for a tract of Oneida Indian Nation-owned land across from the International Boxing Hall of Fame at Thruway Exit 34 near Canastota. It would be Tesla’s first direct sales outlet in the state outside the New York City area and is expected to open in 2025.

This is going to enable Tesla to expand in the state of New York without having to convince state legislators to let them sell directly to consumers without having to go through a middleman.

Electrek’s Take

You might think that it shouldn’t be a tough ask for legislators, but it can be when dealerships are big contributors.

Good for Tesla to find a solution, even if it’s not the most ideal. Ideally, those laws would just not be abused to protect car dealers who should just be willing to compete with Tesla and any other automakers that decided not to go the franchise dealer route.