Tesla CEO Elon Musk used his personal wealth and influence to enter American politics, becoming the de facto head of the Department of Government Efficiency. And he is now discovering that Newton’s third law of motion — for every action, there is an equal and opposite reaction — also applies to politics. Protests, boycotts, and acts of vandalism have targeted the primary source of Musk’s wealth: Tesla. And Tesla could be facing new legislative threats in New York.
Democratic state assembly members in New York have proposed two new pieces of legislation that directly affect Tesla’s business dealings in the state.
Key Takeaways
- Elon Musk’s political involvement has impacted Tesla on several fronts
- New York legislators are targeting Tesla’s direct-to-consumer permits
- Tesla’s Gigafactory in Buffalo may also be investigated
- Tesla’s ability to sell cars depends on a patchwork of laws, carve-outs and legal rulings
- Those state-level laws could end up being a major issue for Tesla
Tesla’s Direct-To-Consumer Sales Permits Could Be At Risk
Many states have laws that protect car dealerships and forbid automakers from direct-to-consumer sales. New York is one of several states that offer an exception to Tesla. New York provides permits for Tesla to operate direct sales in five locations. A new legislative proposal could effectively strip Tesla of those permits.
The proposed law would bring those five direct-to-consumer sales permits for EV manufacturers up for renewal in 2026, with the purported goal of bringing in new EV manufacturers and providing more locations upstate. That would allow manufacturers like Rivian and Lucid to apply. It would, more crucially, block the previous permit holders — Tesla holds all the permits — from reapplying.
Tesla’s Buffalo Gigafactory Could Also Be Targeted
Another Democratic New York assembly member is proposing the Determining Obligations and Guaranteeing Enforcement Act (not coincidentally abbreviated to DOGE). This Act would launch an investigation into state contracts related to the Tesla Gigafactory in New York.
“This legislation would prompt an investigation of all existing contracts relating to the leasing of state-owned premises to private parties for the production, manufacture and/or development of solar shingle products, electric vehicle charging networks, advanced driver-assistance systems, and/or supercomputer hardware, including, but not limited to, the Tesla Gigafactory in Buffalo, New York.”
New York reportedly invested $959 million in the facility, which has been a target for critics of wasteful government spending in the past. The legislation would require Empire State Development to terminate contracts with Tesla and seek the return of state funds if contractual obligations were not met.
TopSpeed’s Take
This isn’t the space to predict how the fluid, complicated situations in American national and state politics and Tesla will play out. We can say that Tesla’s legal standing to sell cars depends on a patchwork of law changes, legal carve-outs to circumvent dealership laws, and court rulings at the state level. The political climate has changed since Tesla received many of those allowances. And Musk’s reported involvement in Wisconsin’s Supreme Court race — with a pending lawsuit to try to open Tesla dealers within the state — testifies to how vital those state-level legal battles are for Tesla.
Read the full article here
