New York Democrats Propose Bill To End Tesla's Direct-To-Customer Sales Model: 'Why Should We Give Them A Monopoly'

In a move that could potentially disrupt Tesla Inc.‘s TSLA sales model, Democratic lawmakers in New York are pushing to end the automaker’s direct sales exemption. This comes as a response to CEO Elon Musk‘s support for the Trump administration.

What Happened: State Senator Patricia Fahy, a co-sponsor of a bill currently in the state legislature, is questioning Tesla’s unique exemption from the 2014 ban on automakers selling directly to customers. Fahy asked, “Why should we give them a monopoly?”

Fahy also criticized Musk’s association with an administration that she claims is “killing all the grant funding for electric vehicle infrastructure, killing wind energy, killing anything that might address climate change.” The proposed bill stems from the tense relationship between the Democratic Party and Musk under the Biden administration.

New York Democrats are pushing for an audit of a deal that gave Musk's company nearly $1 billion in benefits for a Buffalo plant, with a bill that could enable the state to reclaim the subsidies. Officials also want pension funds to divest from Tesla.

Tesla did not immediately respond to Benzinga’s request for comment.

If the bill is approved, Tesla customers in New York may need to travel out of state to receive their cars, reported Fortune. This could significantly impact Tesla, especially as the company faces growing competition from rivals like Rivian RIVN, Lucid LCID, and Volkswagen’s upcoming Scout.

Why It Matters: Tesla’s right to sell cars directly is also under challenge in several other states, including Washington, Florida, Colorado, Illinois, South Carolina, and Rhode Island.

This development comes on the heels of Tesla’s recent earnings miss. Despite missing both revenue and earnings expectations, the market response was surprisingly positive, with Tesla’s stock opening higher the following day. Investors reacted positively to Musk’s promise of dedicating more time to his company than to DOGE.

However, Tesla has been facing challenges on other fronts. The automaker’s sales in California hit a four-year low, with left-leaning customers reportedly turning away due to Musk’s political actions. If the proposed New York bill passes, it could further complicate Tesla’s sales strategy and impact its market position.

Meanwhile, State Senator Jacob Ashby, a Republican from Colonie, criticized Ms. Fahy's bill as misguided, stating that "government should not be picking winners and losers on this."

Tesla holds a momentum rating of 92.80% and a quality rating of 94.16%, according to Benzinga’s Proprietary Edge Rankings. For an in-depth report on more stocks and insights into growth opportunities, sign up for Benzinga Edge.