Why Tesla Opened A Dealership in a Former New Mexico Casino
In 2016 The Pueblo Tribe of Nambe opened the 7,300 square foot, Nambe Falls Casino adjacent to the large travel center that it operates on tribal land approximately 16 miles north of Santa Fe, New Mexico.
The casino, however, was not profitable and closed the following year.
But in 2021 #Tesla leased the property and converted the former #casino into a sales and service center.
Why did Tesla choose a 7,300 square foot former casino as the site of its first #cardealership in New Mexico?
Because the site was located on sovereign Pueblo tribal land - and enabled Tesla to skirt #NewMexico state law that bans automobile manufacturers from directly selling and servicing vehicles in the state.
Dozens of states have franchise laws in place that prohibit or restrict direct sales by auto manufacturers - and require them to instead be made through independent #dealerships.
In some states - like New Mexico - these bans also extend to servicing vehicles.
#Tesla, unlikely most auto manufacturers, has maintained a high level of vertical integration - including over its sales, distribution and service network - and has eschewed the common automotive industry practice of utilizing independent franchise dealers to provide these services.
As a result, Tesla cannot directly sell - or even service - its vehicles in many states.
Tesla’s initial real estate plan in states that banned direct sales was to operate “galleries” in high end malls.
But Tesla could not sell vehicles, arrange test drives or discuss prices or financing at these galleries.
And it obviously could not offer vehicle service.
However, providing convenient vehicle service became a critical issue for Tesla, particularly without a large physical #dealership presence.
Initially Tesla used a fleet of approximately 1,000 mobile service vehicles to come to customer homes.
But wait times were long - and many customers were difficult to reach.
Tesla has responded by opening new service centers at a rapid pace.
#Tesla has also litigated in states with restrictive laws and pushed for new legislation to secure the ability to directly sell and service vehicles.
For instance, Tesla-supported legislation that passed in Ohio in 2014 established a three store limit for auto manufacturers engaged in direct vehicle sales in the state at that time - but did not restrict the number of service centers that a manufacturer could operate in the state.
Since Tesla already operates three dealerships in Ohio that sell vehicles, all new Tesla locations in the state - like the former Akron-area Toys R Us that it opened in 2021 - can only act as service centers and cannot be used to sell vehicles.
At least #Tesla has work-arounds that now allow it to sell vehicles in Ohio and New Mexico.
Laws in many other states continue to expressly prohibit manufacturers from owning, operating or acting in the capacity of a franchised or non-franchised dealership.
Including in Texas, site of a large Tesla Gigafactory.
So even Tesla vehicles that are manufactured in Texas must be first shipped out of state before they can be bought by Texas residents.
But back to New Mexico.
The 7,300 sf #Tesla sale and service center in the former Nambe Falls casino is too small to serve its needs in the state.
And New Mexico state law has still not changed.
New Mexico, though, is home to 23 different tribes - each which is a sovereign nation - and millions of acres of tribal land.
So Tesla recently partnered with another tribe, the Santa Ana Pueblo, and is now developing a new 35,000 square foot building on its tribal land for its second New Mexico dealership site.
It is set to open this May.
