BIG STORY: Effort to break direct car sale ban stalls at Statehouse

By Herb Frazier  |  South Carolina car enthusiasts who are craving for a convenient way to buy an electric Tesla car in the state will have to keep waiting. A bill that would have allowed makers of new electric cars to sell their products directly to South Carolinians stalled this year at the Statehouse.

Automakers currently can’t sell new cars directly to South Carolina consumers without having a brick-and-mortar dealership in the state, according to state law. Rep. Mike Burns, R-Greenville, introduced a bill last year to make an exemption for electric vehicles. State Sens. Sandy Senn and Chip Campsen, both Charleston County Republicans, co-sponsored an electric car exemption in 2019, but it also failed to garner debate. 

Burns’ proposed exemption didn’t mention Tesla Motors directly. Several Upstate residents complained to him they couldn’t buy a Tesla in South Carolina because of the law. Tesla currently sells its cars through company-owned sales centers, including those in Savannah and Charlotte. Traditional dealerships, however, are independently owned.

Burns told Statehouse Report that his constituents are “frustrated because there are no [Tesla] dealerships here. The way the law is written [buyers would] have to buy in a state that permits it then import it into South Carolina or buy it directly from the company and then import it in. They felt it was a hassle to do that.”

Although the bill didn’t spark interest in the last legislative session, Burns said “the landscape might be a little different when we go back (in session) next year” as more federal electric-car tax incentives gain traction.

There are slightly more than 11,000 electric cars registered in the state of which about 6,400 are Teslas, according to the S.C. Department of Motor Vehicles (SCDMV). By comparison, more than 65,000 electric-gas hybrids are on the state’s highways.

With big automakers selling electric cars and hybrids, Burns said, “that takes some of the sting out of this problem because if you are interested in an electric vehicle, and not specifically a Tesla, then it gives (consumers) a place to shop.” Burn also filed a bill in the House to pilot placing one electric charging station along each of the state’s five interstate highways. That bill also didn’t get a hearing, but it has some interest in a Senate subcommittee, he added.

It is unknown how much revenue the state is losing because of the ban on direct sales of electric vehicles. Buyers pay 5% of a car’s price up to $500 as an infrastructure maintenance fee (IMF). That fee, which replaced a state vehicle sales tax five years ago when the state upped the state’s gasoline tax, goes to the state Department of Transportation, which maintains the roads, said Lauren Philips, SCDMV’s deputy director for legislative affairs. If a South Carolina buyer pays $200 in sales tax for an electric or gasoline-powered vehicle in another state, the buyer is charged $300, she said. If a buyer paid $500 in sales tax in another state, however, no fee is owed to South Carolina, she added.

Direct sales would compete with dealers

The ban on new electric car sales directly to consumers is perhaps welcomed news for manufacturers who have business ties with traditional dealerships. Sims Floyd, executive vice president of the South Carolina Automobile Dealers Association, did not answer several emails and phone calls from the Statehouse Report.

Chris Marquez, founder of the Facebook group Tesla Owners of Charleston SC, said, removing the direct sales ban should have bipartisan support in the legislature, but it has been “made political by local dealerships and the automobile association. Direct sales is an automobile industry disruption, and those in control fight the consumer, all while claiming to try and protect the consumer. The existing laws were never created to protect the consumer and there are regular examples of the dealership model hurting consumers and limiting competition.” 

Marquez said people in South Carolina are often dismayed and shocked to learn that direct sales and servicing of Teslas is illegal in the state. “Most people don’t even know this is a law,” he added.

Last year, a series of Senate amendments to the dealer-manufacturer law altered the sale of motor vehicles through a dealership. The amendments clarified and strengthened the prohibition on bypassing the dealership. For example, one change made it clear that a manufacturer could not directly lease to a customer. It also explicitly stipulated a manufacturer was not a dealer as defined in the law. 

Veteran South Carolina journalist Herb Frazier is special projects editor with the Charleston City Paper. Have a comment?  Send to: feedback@statehousereport.com