Mt. Kisco Takes Our Tesla Taxes

The other day, David Pogue — the tech writer (Yahoo, New York Times, Scientific American), TV correspondent (“CBS News Sunday Morning,” PBS “Nova Science Now”) and author (“Missing Manual” series, “Pogue’s Basics”) — reported a Tesla story.

Pogue is also a devoted Westporter. He decided to localize his piece, exclusively for “06880.” After all, our town is (supposedly) the Tesla capital of Connecticut. He writes:

These days, we’re seeing a lot of Teslas on Westport streets. And no wonder: These electric cars are gorgeous, fast, and unbelievably smart. They’re far better for the environment than internal-combustion cars. You never need gas. There’s no engine and no transmission, so there are no oil changes, tuneups, or emissions checks. You get a total of $10,500 from the state and federal government, in cash and tax credits, to help you buy one.

And in Westport, there are free charging stations all over town — in the sweetest electric-car-only parking spots.

But every time you see a Tesla in Westport, remember that its owner drove to Mount Kisco, New York to get it.

That’s right: You’re not allowed to buy a Tesla in Connecticut.

Robin Tauck’s Tesla license plate sends a message.

Connecticut and 15 other states have an ancient law on the books. It bans a car maker from selling directly to the public, as Tesla stores do.

The law was designed 80 years ago to protect local franchises — the traditional car-dealership model — from having to compete with stores opened by the car makers themselves. Local Ford dealerships, for example, didn’t want Ford to open its own store across the street and run them out of business.

Of course, the law never envisioned a car company, like Tesla, that didn’t use the franchise system. (Why doesn’t Tesla use the normal local-franchise dealership model? It believes that electric cars require more explaining and patience than a traditional dealer would bother with.)

A number of states have recognized the anachronism and overturned the ban—but not Connecticut. Every time the ban comes up for a vote in our state legislature, our legislators continue keeping Tesla out of the state.

That’s a result of lobbying work by CARA (Connecticut Auto Retailers’ Association). “They’ll be the legislators’ best friends,” says Bruce Becker, president of the Electric Vehicle Club of Connecticut. “What some dealers do is, they’ll actually man the campaigns. They’ll have a campaign headquarters in their dealerships. There’s one dealer who’s actually running the campaign for someone who’s running for governor.”

He says that there’s a simple reason why car dealers want to keep Tesla out: because electric cars threaten their profits. Car dealerships make most of their money on service (3 times as much profit as they get from selling cars, according to the National Automobile Dealers Association). And as noted above, electric cars require almost no service.

“You’ve got these entrenched special interests that have really pushed hard, and they seem to be more entrenched every year, because they see the risks to them personally,” Westport state senator Toni Boucher told me. “There’s such an enormous amount of opposition.”

20 Saugatuck Avenue was considered recently as a site for a Tesla service center.

So what’s the result? Connecticut loses jobs, sales, and property tax to surrounding states.

This protectionism will make it difficult to reach Connecticut’s environmental goals (to lower emissions to 45 percent of 2001 levels by 2030).

“This is the unfortunate thing about CT politics: So much energy goes into creating these monopolies and protecting and limiting trade, as opposed to innovating and creating a more efficient economy,” says Becker.

I did a deep dive on this topic in my Yahoo Finance column this week. I interviewed not only Bruce Becker and Toni Boucher, but also Westport’s state representative Jonathan Steinberg; Tesla’s head counsel Todd Maron, and car-dealership lobbyist Jim Fleming, president of the CT Auto Retailers’ Association.

It’s a surprisingly fraught, sensitive, contentious issue, filled with back-room deals and arguments on both sides about what’s best for the consumer.

Meanwhile, next time you see a Tesla driving by, nod in acknowledgment to the trip its owner took to Mount Kisco.

37 responses to “Mt. Kisco Takes Our Tesla Taxes

  1. why doesn’t Tesla form their own company owned franchise network? Seems to me that would solve the problem. If they wanted to sell in a foreign country they would structure an entity to fit in the required business model. There has to be something behind this argument that we are not being told.

  2. Thomas B Hood Jr.

    Ok…. I’ll bite….. what does Robin Tauck’s license plate mean?

  3. Michael is right – there is something here that we’re not being told. Corporate attorneys are good at working with / around local laws and regulations. Also, other manufacturers (Nisan, Chevrolet, etc.) sell electric cars through franchised dealers and these dealers manage to service those cars. My guess is that the “behind the scenes” reason is more $$$ for Tesla, by cutting out the middleman.

  4. I am guessing it is a good bye to OPEC as Tesla’s do not require oil! I learned the CU (see you) from my kids!

  5. “You get a total of $10,500 from the state and federal government, in cash and tax credits, to help you buy one.” In other words, you can signal your virtue with money forcibly confiscated from other people.

    • William Strittmatter

      You probably should replace “you can signal” with “affluent people can signal” since you can’t buy a Tesla for less than $50,000 and you need at least $100,000 gross income to fully utilize the $7,500 federal credit. Maybe no big deal for many in Westport or Fairfield County but, as a reminde, $100,000 gross income is around the top 20% across the country.

      Interesting that whoever drove this tax break, chose to subsidize those who need subsidies least.

  6. I’m so disappointed in my state. Ct keeping the most innovative and green company out is unbelievable. I will never buy or service a car in ct again. Total corruption. We are better than this.

    • CT is not forcing any company out. Tesla is opting out because, rightly or wrongly, they do not want to work within the current system.

  7. Gerald F. Romano, jr.

    Dear David Pogue,
    You have been misinformed about the people who did not want Tesla at 20 Saugatuck Ave Westport, CT
    The surrounding residences were not against Tesla they were against the location.
    Tesla tried to change a zone in a predominately residential neighborhood
    to sales, repair, storage etc, of Tesla’s
    They tried with the land owner to jam a square peg in a round hole
    Sincerely
    Gerald F. Romano, Jr.

    • David J. Loffredo

      And now instead they’ll get a daycare with 150+ kids….

      • Elizabeth Thibault

        There’s no demand for that kind of childcare in this town. Unless they’re offering an accredited program with full time care, where all teachers are certified and have early childhood education degrees, FOR FREE, they’re not going to have 150 children.
        Also, it’d be much better to hear the giggles and laughter from children playing, rather than the sound of pneumatic drills and the like.

  8. I’m all for going green, cutting our dependence on foreign oil, etc. but electric cars don’t run on fairy dust. It takes oil, natural gas or some fossil fuel to generate that electricity. Until we can generate more electricity from wind, solar or nuclear (all of which trigger a NIMBY response) we are just shifting the use of fossil fuels from the car driver to the utility company. Also, electric car batteries are full of toxic chemicals which have to be disposed of when the batteries reach the end of their life. Then they end up in a hazardous waste site or dumped in some river by an unscrupulous waste hauler.

    All that being said, I agree that electric cars are the way of the future, but in the short term, there are a lot of issues to resolve.

  9. Why are charging stations free in Westport….or anywhere? We don’t get gas free? I agree having charging stations and even designated spots (Extension cords are only so long) But free is not fair? Who actually pays for it?

  10. Shelly Sherman, MS, RDN sbk.sherman@gmail.com 203 858-1946

    >

  11. As a long time Westport resident and a local car dealer, I wanted to clarify the tax revenue for the State of Connecticut. Unlike an out of state purchase of clothing or furniture, sales tax is paid to the state where the vehicle is registered. Unless a Tesla or any other new or used vehicle, is registered to an address in NY, all sales tax is collected by the NY or MA dealer then paid to the state of Connecticut upon registration. Each town or city asesses and collects property tax on all vehicles registered within the town. Tesla is an amazing product and a pioneer in electrification. This is an exciting time for the industry with more choices coming for the consumer.

    • William Strittmatter

      Thank you for the clarification. When I first read the headline (and section in article about lost sales and property tax revenue) I thought the author must either be confused or intentionally misleading. Unless something had changed since I got my Tesla Model S in 2013, Tesla in NY collects CT tax on CT registered new car sales and remits accordingly.

      Maybe Mr Pogue is confused if Tesla did the registration for him – just wrote a check to Tesla in NY and incorrectly assumed he was paying NY taxes. Unless, that is, Mr Pogue has multiple residences and chose to register his car in NY.

      CT loses nothing except maybe jobs from having local stores (which Westport didn’t want anyway).

    • Ryan

      The head of the DMV says that taxes on cars purchased out of state are paid to that state except for any increment attributable to a higher tax rate in CT. See 7th to last paragaph in this article quoting the Head of the DMV: https://www.theday.com/article/20180224/NWS01/180229620

  12. Lawrence J. Zlatkin

    As to the comment about Tesla not conforming its business model to Connecticut, why should it? I thought we believe in the free market, and if the free market means Tesla wants to sell directly to the consumer, why shouldn’t it be allowed to do so? I understand the need for government regulation when it serves an important objective like safety and security, but this rule is simply about monopoly and protecting franchises and dealers. BTW, yes, Tesla electric usage requires connecting to the grid, but the grid is cleaner than oil and in many cases is based on renewable or other greener sources. And, yes, Tesla uses batteries, but they are guaranteed for 8 years and will be recycled afterwards, not thrown in a toxic waste dump.

    • My points were not to condone the current franchise system as yes, it does impede the free market and there is a viable argument for change. I was merely responding to the emotional argument that the system is stopping Tesla from moving forward in Connecticut.This is all about business and should be handled in a business like fashion sans the emotional hyperbole.Tesla has made a choice and they need to work it through like any other business faces their challenges.

  13. Some of you may know the following process…I registered for a Tesla many months ago and put down $1,000 to reserve a car. I recently received an email saying my Tesla was ready and I could order it online. Literally, it took about one minute to go through the options and click BUY. However, I wanted to drive one before ordering. The closest showroom was in Greenwich so we drove down and looked at the various Teslas. We could not test drive due to CT laws nor could the salesman legally quote us a price. They suggested that a salesperson could come to our Westport house with a Tesla to test drive. Two days later a very knowledgeable woman pulled up with a beautiful Tesla to test drive. She scanned our driver’s license and off we went in a test drive. Then that afternoon a Tesla salesman called me from NY and took me through the pricing.
    MORAL OF THE STORY…Call any new car dealer in Westport and see if they will drive over to your house for a test drive and not make you go through a long negotiating process. Maybe Tesla has it right and CT has it wrong.
    PS – I did not buy the Tesla, I am waiting to buy to see if Tesla survives, but the Tesla car is amazing and the buying process was painless.

    • William Strittmatter

      “No haggle” pricing was tried by GM with Saturn and Toyota with Scion but didn’t seem to work (though that may also have been the product). Apparently, car buyers expect discounts/haggling and assume fixed prices are just trying to lock in above average margins.

      Interestingly, even with their stated fixed price policy, turns out that even Tesla discounts. Also turns out they no longer just build to order which supported their fixed price policy. HINT: wait until the last month of the quarter when they are trying to hit some target and be willing to buy something from inventory and you can get several thousand off “list” and/or free supercharging for life. Sort of like other dealerships.

      By the way, if you are concerned about Tesla’s survival, you might want to ask for a refund of your $1,000 reservation. If they fail and liquidate, you are unlikely to get much, if anything, back since they don’t have deposits in a separate bankruptcy proof account. And it certainly won’t cost you your place in the queue (unless maybe you are waiting for the $35,000 version) since they will accept orders from anyone now.

  14. I’m surprised! No one is addressing the obvious future that is already here. It’s like the lesson of the Buggy Whip factory. I heard Volvo just announced a new car business model; You pay to use a car not own it. Why do you think Uber & Lyft company valuations are so high?… and will go higher when they don’t have to pay drivers as cars become completely autonomous. College kids don’t ask for a car to go away to school with they ask for an Uber or Lyft account (it’s cheaper than owning a car, paying for gas, insurance for under 25, maintenance and the hassle of parking or paying for that too,etc,etc. All this is transitional, In the near, repeat, near future, you will only need to tap your phone to have a car waiting to take you anywhere you need to go and will be sized for the number of people going with you. The days of the American car culture is over as we know it. Kids aren’t even getting licenses anymore. All the car manufacturers are scrambling to redirect their business models, and so go the Dealership franchise monopoly on one of the most lucrative businesses you can ever hope to break into. There will be only a couple of ELECTRIC car companies that will make cars and compete for which App (read Price) you will use to conjure your ride up at your whim. Like the buggy whip factories of yore, their days are numbered. I call all of this- the Digital Divide- that is transforming everything as we know it. PS- if you think it won’t happen soon, think again. Remember the Cable companies, their ride is over too.
    Mr. Pogue, really!?

  15. I foolishly rarely read Dan’s Blog. So, this may be the norm. But, I am impressed by the very high quality of various comments here. Thanks to those of you who have provided good information. One question, would adding a franchise network (proposed as a way to be in CT) increase the price of the car to the consumer?

  16. Connecticut is one of only a handful of states where Tesla electric vehicle cannot be sold. However it will likely join the 21st century this November. Ned Lamont drives a Tesla while Bob Stefanowski is pro-business. My guess is within a year.

  17. The “clean driving” concept attached to electric cars is pure phantasy…unless one has access to solar generation. The rich can make the feel good purchase of an electric vehicle, but when charged by non solar plug in, that person is simply polluting in another persons back yard. ESPECIALLY now that ass hole Trump has seen to greater coal, gas and nuclear pollution.

  18. Bruce…tell us about that. I am not aware that such is available…whom do I call or contact?
    Thanks……
    PS. Most folks with EV’s probably don’t even know about the option and, if they do, have not selected it….my point still stands, I believe.

    • Any one that cares about global warming and resultant flooding of Main Street and our beach areas that impacts all Westporters, should take a minute or two to sign up for 100% renewable energy from Eversource. There are 28 providers that provide 100% renewable electricity, and one of them, ClearEdge, even provides free weekend charging for EVs if you use a ChargePoint Home charger:

      https://www.energizect.com/compare-energy-suppliers

    • Bruce Becker is right. If you want to reduce your carbon footprint, CT continues (despite a lack of rational funding) to subsidize solar. Eversource is the administrator of the program. I have solar panels and have had a Tesla as well. Solar covered about 1/3 of my family’s electricity needs. The state of connecticut via subsidies and tax benefits (plus federal deductions that are likely to be repealed if the House of Representatives stays Republican) were aggregated to cover about 2/3 the total cost of installing solar. The system paid for itself within 4 years. BTW, you can also use an alternative provider to Eversource and specify that all of your electricity come from wind and solar as Dorothy says above. Bottom line is that electric cars can most definitely be part of a solution for climate change, they can also be cost effective – and they’re pretty fun too! Big mistake for State of CT is that they are paying for my solar generation for my electric car but giving the taxes associated with my car to The State of NY – makes no sense. Dan is absolutely right. Tesla Model 3 is now the best selling luxury car in USA and CT collects zero taxes from it. Wow.

  19. The sales tax, is paid in New York, they may or may not forward it. And many people windup paying it twice, especially if they finance, or lease. New York State dealerships are almost as sticky fingered as Connecticut. Especially Lexus.

    As for subsidizing the wealthy, that’s funny as they pay the lions share of the taxes anyway and then we give them the best spaces. Better than the handicapped, for free. That’s truly rich. Lastly Lithium Batteries are extremely toxic, as is their mining, and disposal. But we will be stuck with that cost, when they are donated to a charity, yes for another tax deduction.

    Tesla will not survive, Mercedes, Volvo, Volkswagen, Porche, Jaguars, and General Motors, entry into the market. But if anyone can, Elon can pull the rabbit out of the hat 🎩

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