For years, one of the highest-profile manufacturers of green cars couldn’t do business in New Mexico, even as it became one of the greenest states.
Tesla’s business model doesn’t conform with a state law prohibiting manufacturers from selling vehicles directly to consumers. Instead of using the traditional model of franchised auto dealerships, Tesla relies on its website and a network of company-owned stores for direct sales.
Despite often tense debates in Santa Fe to allow Tesla storefronts and service centers, repeated efforts have failed in the Legislature. Local auto dealers with substantial political muscle have carried the day and maintained their exclusive rights for new-vehicle sales in New Mexico. They argue correctly that their businesses already support thousands of employees and that they have worked hard over years, decades, even generations to build their businesses. It’s understandable they want to keep things the way they are.
The Palo Alto, California-based electric car company worked around the law, striking a deal with Nambé Pueblo to open a sales and service center inside an old casino north of Santa Fe along U.S. 285. Even critics have to admit it was a deft business decision.
Tesla’s move to locate its first facility on Native American land in the United States was adroit because the 7,000-square-foot store is within tribal boundaries and therefore not subject to state law prohibiting direct vehicle sales.
For Nambé Pueblo, it’s a prudent diversification of its economy, something altogether different from the old casino the storefront replaces.
For New Mexicans interested in buying or servicing a Tesla, it reduces the need to go to out-of-state storefronts and service centers in places such as Arizona and Colorado.
For New Mexico, it marks the first Tesla storefront in the state, albeit one presumably not subject to the traditional state taxes.
And for traditional car dealerships, it means competition just went into overdrive.
Senate Majority Leader Peter Wirth, D-Santa Fe, attended the Sept. 9 opening of the Tesla store with several other politicians. Wirth predicted more companies will use the tribal model to elude the state law. That’s unfortunate and raises the question, is New Mexico truly open for business? And is there a way to honor the traditional while accommodating the new sales models?
Wirth and state Sen. Bill Tallman, D-Albuquerque, who also attended the Sept. 9 opening, said they expect vehicle-sales legislation to be proposed in future legislative sessions. Proposed changes in years past, including a narrow 2019 proposal, would have allowed electric vehicle manufacturers to sell directly to the public under certain conditions. All such legislation has failed.
And that ignores the reality that cars and trucks are often being sold in different ways today than in years past. Consumers are picking out makes and models and colors online and having them delivered to their driveways. The days of dickering and test drives are diminishing. Carvana, the fastest-growing online used-car dealer in the United States, uses multistory car vending machines to dazzle customers with shiny cars under neon lights. Customers can insert a special coin and watch as the machine dispenses the car or pick out a car online and have it delivered to their home. But Carvana sells only used cars and wouldn’t be allowed to sell new ones under New Mexico law unless it were a licensed franchise of a manufacturer.
Tallman, who drives a Tesla himself, says electric vehicles are the future and New Mexico’s laws need to keep up. On the former, he’s right – Ford announced this week that it is investing $11 billion in EVs and battery plants, and General Motors and others have committed to delivering more electric models in the near future. On the latter, the opening of the Tesla sales and service center on Nambé Pueblo should solidify his argument.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.