Power to Change Happens through You

By Patrick Ho | April 28, 2022

New York State proudly displays the Latin word EXCELSIOR on its state flag, meaning “ever upward.” Since the 1700s, the State has made and worked to keep this promise for its citizens. However, it is the responsibility of citizens to ensure this promise is upheld by the politicians and leaders they elect. As a New Yorker, this has instilled in me a strong feeling of both honor and duty – and I feel as though I currently have a duty to shed light on a piece of legislation that stands in the of way this great State’s fight against climate change and undermines the free-market principles on which our country was founded.

Governor Hochul recently announced her commitment to increasing the number of electric vehicles (EVs) on New York roads, beginning with a pledge to increase EV sales to 90% of new vehicles sold by 2030. While this signals a genuine desire among New York’s leadership to fight climate change through the rapid expansion of EVs, its realization is precluded by a 2014 law that prohibits the direct sale of EVs to consumers in an effort to protect car dealers, who rely on a franchised sales model, from fair competition.

As of today, seven  out of ten electric vehicles on the road in New York have been sold by Tesla through its direct-to-consumer model. While the rest of the industry is slowly waking up to the fact that the future of automobiles is electric, Tesla remains the biggest driver of EV growth in the country. Last year alone, the company saw an 89% increase in deliveries.

Yet, in New York, Tesla is only permitted to operate the five dealerships it had established throughout the state before the direct sales cap took effect. Emerging battery electric vehicle companies – such as Rivian, Lucid, Arrival, and others – are prohibited from entering the marker under a direct-to-consumer sales model altogether, despite the fact that the direct-to-consumer model offers a more efficient and cost-effective sales structure. Thus, while the rise of these new BEV companies should inspire hope for a cleaner, more sustainable transportation future, they remain futile without the ability to facilitate sales.

The facts are clear – on average, the rate of EV adoption per capita in states with uncapped direct sales is nearly double that of states such as New York that limit direct sales. Without repealing the protectionist direct sales cap, New York will never reach its lofty goal of 90% EV sales by 2030. And New York’s leaders know this to be true. In fact, the Climate Action Council, specifically called for expanding direct-to-consumer EV sales in New York as part of its Climate Action Plan as a way to remove barriers to EV adoption and “increase the availability and sales of ZEVs in the State”.

Beyond serving as a critical roadblock in the state’s fight against climate change, the direct sales cap fundamentally undermines the core principles of a free market economy by serving to protect the interests of auto dealerships at the expense of consumer autonomy. A recent finding estimated that, in 2021, the total value of “markups” by dealerships at one legacy auto company amounted to about $3.6 billion. In fact, according to AutoNews.com, 2020 and 2021 were the two most profitable years ever for franchised automobile dealers, despite sales declining 14% from 2019 levels. This robbery of American consumers is made possible by the antiquated laws that allow dealers to drive up profits by denying consumers the ability to purchase their desired vehicles directly from manufacturers at a transparent, uniform price.

Until the direct sales cap is eliminated, New York’s vision for an EV future will remain nothing more than a castle in the air – and we will all pay the price, whether that would be raising vehicle prices or the devastating impacts of climate change. Yet, as representatives of the State, it is our duty to call on our lawmakers to lead us down a better path. Collectively, we hold the power to see and make the necessary changes for a better tomorrow. Join me in calling on Governor Hochul to eliminate the direct sales cap, and together, we can drive our State ever upward – EXCELSIOR.

Patrick Ho, President, Tesla Owners Club New York State