Tesla is facing a potential setback to its direct-to-consumer sales model in Washing State. The automaker is urging owners and potential owners in Washington State to reach out to their State Representative to voice their concerns over a newly introduced bill, Senate Bill 5377.
The bill is currently under consideration in the Senate Labor & Commerce Committee, and if passed could force Tesla to shut down its Service Centers across the state, potentially impacting both vehicle purchases and service availability for residents.
What is SB 5377?
SB 5377 seeks to amend the state’s regulations on auto sales. In a post to the company’s Engage website, Tesla has said the legislation would restrict its direct-to-consumer sales model, which allows customers to buy vehicles without going through traditional franchised dealerships.
Tesla says that if SB 5377 passes, Washington residents might have to travel out of state to complete their Tesla purchases. Beyond sales, the bill could also impact Tesla’s ability to provide in-state services, such as warranty support and maintenance, making ownership more difficult for existing Tesla owners.
Potential Impact on Consumers and the Auto Industry
The direct-to-consumer sales model used by Tesla and some other automakers is designed to provide consistent and transparent pricing across all locations, without additional dealership markups. Tesla contends that SB 5377 would stifle competition and limit consumer choice by forcing buyers to rely solely on dealership sales, rather than allowing automakers to sell directly to customers.
Beyond Tesla, the bill would also restrict direct-to-consumer vehicle sales for other companies that operate outside of the traditional dealership model, like Rivian and Lucid, potentially slowing down the adoption of electric vehicles (EVs) in the state.
Arguments For and Against SB 5377
Supporters of SB 5377, including those in the dealership industry, will argue that the legislation is necessary to maintain a level playing field for traditional auto dealers, who must comply with franchise laws. They believe that dealer networks provide jobs and economic benefits and that automakers should follow the same sales regulations as other manufacturers.
However, opponents, including Tesla, argue that the bill represents a step backward in consumer freedom. They claim that rather than protecting customers, it limits choices and increases costs by eliminating the ability to buy vehicles directly from the manufacturer.
What’s Next?
As SB 5377 moves through the legislative process, Tesla is urging Washington residents to contact their state representatives and express opposition to the bill. The company encourages customers to share how the legislation could affect them personally, whether it be through loss of local Service Centers, difficulty purchasing a Tesla, or concerns over limited EV options.
Tesla has even created a tool to make it easy to contact your State Representative. You can access it here.
For now, the bill remains in committee review, and it is unclear how much support it has among lawmakers. Washington residents interested in following the bill’s progress can track it on the Washington State Legislature website or reach out to their local representatives to make their voices heard.
You can read the full text of the proposed bill below.
