Tesla is Expanding Its Presence on Tribal Grounds in Order to Circumvent State Rules Prohibiting Direct Sales

Tesla is Expanding Its Presence on Tribal Grounds in Order to Circumvent State Rules Prohibiting Direct Sales

Tesla is stepping up its efforts to create shops on tribal territories where it may sell directly to people, avoiding state restrictions that prohibit vehicle manufacturers from also being retailers in favor of the dealership model.

The Mohegan Sun, a casino and entertainment complex in Connecticut owned by the federally recognized Mohegan Tribe, announced this week that the California-based electric automaker will open a showroom with a sales and delivery center on its sovereign property where state law does not apply this fall.

The announcement comes after another new Tesla showroom, set to debut in 2025 on the territory of the Oneida Indian Nation in upstate New York, was revealed in June.

“I think it was a move that made complete sense,” said Lori Brown, executive director of the Connecticut League of Conservation Voters, which has been lobbying for years to reform Connecticut’s statute.

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Tesla is Expanding Its Presence on Tribal Grounds in Order to Circumvent State Rules Prohibiting Direct Sales

“It’s just surprising that it took this long because Tesla had really tried, along with Lucid and Rivian,” she remarked, referring to two other electric carmakers. “Anything that puts more electric vehicles on the road is good for the public.”

Brown highlighted that lawmakers with operating vehicle dealerships in their districts, regardless of party affiliation, have historically opposed laws permitting direct-to-consumer sales.

The Connecticut Automotive Retail Association, which has long opposed such legislation, says a balance must be struck between tribal sovereignty and “maintaining a level playing field” for other vehicle shops in the state.

“We respect the Mohegan Tribe’s sovereignty and the unique circumstances under which they operate their businesses on Tribal land, but we strongly believe that this does not change the discussion about Tesla and other EV manufacturers with direct-to-consumer sales, and we continue to oppose that model,” the association’s chairperson, Hayden Reynolds, said in a statement. “Connecticut’s dealer franchise laws benefit consumers and provide a competitive marketplace.”

Tesla has sought and been refused dealership licenses in various states over the years, advocated for legislative reforms, and fought judicial rulings. Earlier this year, the Delaware Supreme Court overturned a finding that upheld a decision by state officials to restrict Tesla from selling directly to customers.

According to Jeff Aiosa, executive director of the Connecticut Dealers Association, at least 16 states have effectively modified their rules to allow Tesla and other direct-to-consumer manufacturers to sell there. He doesn’t envision Connecticut amending its regulation, noting that it is now followed by 32 “original equipment manufacturers,” including Toyota and Ford.

“It’s not fair to have an unequal playing field when all other manufacturers follow state franchise laws and Tesla wants this exception to skirt the law,” he said. “I believe their pivot to the sovereign nation reflects their unwillingness to follow the law.”

In 2021, Tesla launched its first retail and service center on Native American land in New Mexico. The Nambé Pueblo complex, located north of Santa Fe, was the first time the firm collaborated with a tribe to circumvent state rules, though the idea had been in the works for years.

Brian Dear, president of the Tesla Owners Club of New Mexico, stated at the time that states with tribal nations and laws prohibiting manufacturers from selling directly to consumers would likely follow New Mexico’s approach.

“I don’t think this is going to be the last,” he remarked.

The Tesla Sales & Delivery Center at Mohegan Sun will be housed in a shopping and dining pavilion within the huge casino complex. Customers will be able to test-drive various models throughout the resort. Moreover, gamblers will be able to apply their loyalty points toward Tesla purchases.