Tesla Warns Connecticut Lawmakers That Direct Sale Ban Means Thousands Of Model 3 Sales Tax Revenue Goes To Other States

As we reported earlier this week, a new bill (HB 7097) is being introduced in Connecticut to allow direct sales of electric vehicles in the state. Tesla is pushing for the bill to pass, while local dealerships are strongly opposing it.

Yesterday, the Connecticut Transportation Committee held its first hearing on the bill during which Tesla and dealerships argued yet again over direct sales. Tesla’s Deputy General Counsel Jonathan Chang was present for an hour-long testimony during which he warned that there are currently “thousands” of Model 3 reservation holders in the state that will simply go to another state to make their purchases if the bill doesn’t pass:

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atc98092 - 2/24/2017 12:02:27 PM

+3 Boost

He has a valid point. Those potential buyers are not cross-shopping with any other vehicle with the possible exception of the Bolt. Still, not really the same car.

mre30 - 2/24/2017 12:12:30 PM

+1 Boost

Mr Musk does not understand how state tax law works.

If a Connecticut resident purchases a Model 3 in NY or Massachusetts for example and then they register it in Connecticut, the owner (or the lessee) has to arrange to pay the sales tax at time they tag and register the car with CT.

He is grasping at straws at this point.

The Model 3 launch is going to be a non-event because Tesla is slowing shifting the message from "when can end-user customers get cars" to "we will start production in mid 2017). From a financial perspective, Tesla will, IMO, not realize any sales revenue from actually SELLING completed Model 3's to customers until 2018 at the earliest.

This is going to go down hill very fast in the last six months of 2017.

atc98092 - 2/24/2017 1:19:36 PM

+2 Boost

I can't speak to CT laws, but here in WA state, if I purchase a car out of state and don't bring it into WA for at least 90 days, the state does not collect sales tax from the purchase. Of course, since this is a new car that means it must be licensed somewhere, and garaged somewhere while the time runs out. Since a used car (I know, not this particular scenario) would already be licensed it becomes a simpler process.

Dexter1 - 2/24/2017 4:57:26 PM

0 Boost

I leased a BMW in my home state of Florida. Taxes are calculated into the monthly lease payment. I moved to Texas, and when it came to register the car and get a TX plate, I had to pay a lump-sum tax on the amount calculated in the lease (not residual value.) It makes sense to me that CT will tax the Tesla when the car gets registered in the state, no matter where it was purchased. Pay me now. Pay me later.