New York State Democrats are preparing legislation that could revoke Tesla’s special legal status allowing it to sell vehicles directly to consumers, a move seen as political retaliation for CEO Elon Musk’s alignment with the Trump administration.
The proposed bill, spearheaded by State Senator Patricia Fahy, would eliminate a waiver granted to Tesla in 2014 that permitted it to operate five direct-to-consumer stores in the state. Under existing state law, automakers are generally required to sell through franchised dealerships, but Tesla was granted a unique exemption due to its lack of a dealer network and its focus on electric vehicles.
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If passed, the revised law would end Tesla’s legal carve-out and redistribute the sales licenses to other EV manufacturers that also utilize direct sales models, including Rivian, Lucid Motors, and Scout Motors, a Volkswagen Group brand. The change is designed to level the playing field among electric vehicle startups while also serving as a political statement against Musk’s increasing support for Republican policies.
Senator Fahy, who had previously supported Tesla’s exemption on environmental grounds, indicated her stance has shifted. “Maybe I’m making amends,” she told The New York Times, adding that Musk is “part of an administration that is killing all the grant funding for electric vehicle infrastructure, killing wind energy, killing anything that might address climate change. Why should we give them a monopoly?”
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In addition to the sales bill, Democrats in Albany are calling for a review of Tesla’s heavily subsidized operations in the state, including a $1-per-year lease on a Buffalo-area facility and nearly $1 billion in associated tax and financial incentives. Lawmakers are also urging New York’s public pension funds to divest from Tesla stock holdings.
With Democrats controlling both the legislature and the governor’s office, the bill’s prospects for passage are considered strong.