Idaho law would restrict sale of innovative car

Idaho law would restrict sale of innovative car

by
Dustin Hurst
February 11, 2015
Dustin Hurst
Author Image
February 11, 2015

Idaho law would prevent innovative automaker Elio from selling its car directly to Gem State consumers, an Idaho Transportation Department official confirmed Tuesday.

Elio is a newcomer to the auto market, but the upstart company believes its three-wheeled wonder, an oddity rolling down the road, is the answer for more sustainable and efficient transportation. The car, set for 2016 production, should notch more than 80 miles per gallon on the highway.

The company plans to sell the novelty for just under $7,000. More than 40,000 buyers have put down deposits and are waiting to buy an Elio.

Before it sees action on Interstate 84, Highway 55 or Highway 95, though, the company needs lawmakers to update state rules regarding motorcycles.

Elio’s flagship vehicle looks more like a car, but federal rules deem it a motorcycle for safety and other purposes.

In Idaho, it could soon qualify as an autocycle, an entirely new designation. The three-wheeler would follow licensing and registration rules just like automobiles under legislation passed by the House Transportation and Defense Committee Tuesday.

Joel Sheltrown, an Elio governmental affairs manager and former Michigan state lawmaker, pitched the the idea before the House panel. Sheltrown said his company’s car is much safer than a motorcycle, even though federal rules say it falls under that classification.

“Innovative products require a look at your statutes,” Sheltrown said. “Bureaucratic codes should not stifle innovation.”

Though lawmakers passed the Elio bill to the House with a favorable recommendation, Idaho code will continue to stifle the company even if the measure finds its way to Gov. Butch Otter’s desk.

Elio’s business model features direct sales to consumers, a break from heading to the dealer for car purchases. It’s an innovative way to handle sales, but state regulators are cool to the idea.

Tesla could be the banner-carrier for the direct sales movement. Tesla tries to employ that business model, but several states, including Michigan, have outlawed the practice. Tesla continues pushing for legalization of its business model and is making progress in Connecticut and Arizona.

Steve Grant, a communications officer for ITD, confirmed that Elio would, in fact, have to work through dealerships to sell its cars.

“Idaho consumers who make a retail purchase from a manufacturer or dealership from out-of-state are subject to the statutes and requirements from the state where the sale took place and federal regulations,” Grant wrote. “They do not have any protection or recourse under Idaho statutes.”

Two Mercatus Center researchers, Jerry Ellig and Jesse Martinez, wrote last month that protectionary franchise laws only ruin the market for consumers and businesses themelves.

“Mandatory restrictions make it difficult for manufacturers to experiment with new methods of auto sales or to close unprofitable and inefficient dealerships, which ultimately prevents any potential cost savings to consumers,” the pair warned.

For his part, Sheltrown said Elio will play by the rules. “We intend to follow the law,” Sheltrown told IdahoReporter.com. “We intend to pay our taxes and create some jobs.”

He said his company has not approached Idaho lawmakers about reforming the franchise rules and regulations.

The Idaho Legislature’s only auto dealer, Rep. Kathy Sims, R-Coeur d’Alene, said Elio should work through franchises. “It’s better service for customers,” Sims said. “You have to have dealers.”

Sims, an auto dealer for more than four decades and the owner of a Honda franchise in north Idaho, said the law protects consumers. “If you buy it over the Internet, what happens when it breaks?” she asked.

Elio has partnered with auto parts purveyors Pep Boys and NAPA to address some of those same concerns in other states.

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