In what now appears to be an inexorable march through the Northeastern states, a bill (Senate Bill 1409) providing for the creation of up to five Tesla stores in Pennsylvania passed out of the Pennsylvania Senate late last week.  It now heads to the Pennsylvania House of Representatives for consideration. Given that the Pennsylvania Automotive Association–the Pennsylvania statewide dealers association–supports the bill, it is likely to find success in the House Chamber as well.

Interestingly, and in contrast with a number of other states where state dealer associations have attempted with some success to block statutes that would permit Tesla to sell directly to the public, the state dealers Association supported the original bill.  A spokesman for the Association speaking with Automotive News noted that the tide of public opinion seemed to be changing, and that the dealers wanted to get in front of the trend.  At the same time, the Association also obtained certain changes in Pennsylvania dealership laws that will make it tougher for another manufacturer to open stores

The bill’s consideration and passage was not without controversy.  An original version of the bill did not have any limits on the number of stores Tesla could open in Pennsylvania. The Alliance of Automobile Manufacturers–a group of 12 auto manufacturers that does not include Tesla–objected to the lack of such limits.  The Alliance argued that allowing Tesla an unlimited number of stores would give Tesla an unfair advantage in the hyper-competitive world of auto retailing.  After some haggling, the five store compromise was born.

What does The Pennsylvania Compromise ultimately mean? For one thing, Tesla clearly seems to be finding, it not a welcoming, at least not a hostile reception in most states in the Northeastern United States. For another, it allows Tesla to test its direct-to-consumer sales model in a block of large, populous states from Ohio to Massachusetts. Nonetheless, this compromise, though, sets up potentially difficult conflicts down the road.  Will five stores be enough for Tesla, a company that wants to sell hundreds of thousands, if not millions, of vehicles within the decade? Will this crack in the franchise model of auto sales open the door for other manufacturer challenges in the future, maybe in the courts?  Will consumers embrace the ability to purchase cars directly from the manufacturer, as they have with so many other things like shopping for clothes online?  And what will the mean for dealers, who are often some of the biggest, most prominent and locally active businesses in the local communities?  Only time will tell.