West Virginia became at least the fifth state to ban the direct-sales approach practiced by Tesla Motors following Friday's signature by Gov. Earl Ray Tomblin.
The bill was championed by West Virginia's Senate president, Bill Cole, who is an auto dealer in his home state and Kentucky.
Tesla denounced the legislation.
"Despite a campaign based on pro-business and free market principles, the Senate president's bill prevents competition and protects the car dealer monopoly," Tesla said in a statement. "West Virginians deserve the right to choose how and from whom they purchase their vehicles. We will return next year to fight for consumer choice and free market access."
The President of the West Virginia Automobile & Truck Dealers Association, Ruth Lemmon, said the measure was not "anti-Tesla."
"Tesla could better serve the consumers, the local communities and their product by becoming a true business partner to all concerned," she said in a statement. "West Virginia would welcome (Tesla) to join the ranks of dealerships and play by the same rules and requirements and laws we must do."
The legislation says a vehicle maker may not “act in the capacity of a new motor vehicle dealer” or “operate a dealership, including, but not limited to, displaying a motor vehicle intended to facilitate the sale of new motor vehicles other than through franchised dealers, unless the display is part of an automobile trade show that more than two automobile manufacturers participate in.”
The measure supports claims from the nation's dealership lobby that the existing system gives customers greater flexibility in pricing and ensures local competition for business. Under that theory and with intense lobbying, Michigan in October was among the latest states to bar the direct sales approach. The Palo Alto, California-based electric-vehicle company operates so-called "galleries" in Texas, Arizona, and Maryland because the company's sales practices are barred there, too. Customers can see Tesla cars in these galleries, but they may not order vehicles, discuss prices or take test drives.
Elon Musk's electric car company announced Friday that customers received a record 10,030 cars in the year's first quarter. The company had projected that it would deliver 9,500 vehicles for the first three months of 2015. First quarter sales climbed 55 percent year over year. Tesla said it plans to deliver 55,000 vehicles this year, a dramatic increase from the 31,655 sold last year.
Tesla is branching out from electric vehicle sales. On March 30, Musk tweeted "major new Tesla product line—not a car—will be unveiled" on April 30.
And the month before, during an earnings conference call, Musk said: "We are going to unveil the Tesla home battery, the consumer battery that would be for use in people's houses or businesses fairly soon."
Tesla stock, trading on the NASDAQ, closed Thursday at $191 a share, up $3.41. Markets were closed Friday ahead of the Easter weekend.
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