February 26, 2016 — Tesla has won its latest battle fighting state franchise law designed to keep it from selling vehicles to consumers. at least for a few months. The Indiana Senate Commerce and Technology Committee decided yesterday to send a controversial bill banning manufacturer-direct automotive sales to customers to an interim study committee later this year.
House Bill 1254, which had received strong support from General Motors, overwhelmingly passed a House vote earlier this month. The bill would have forced Tesla to begin selling vehicles through an independent franchise dealer in 2016 by placing an expiration date on its current dealer license — thirty months from the date the original license had been issued. Furthermore, dealer licenses under the current situation would not be renewed. The electric vehicle manufacturer has sold approximately 500 Teslas since 2013 in a showroom in the Indianapolis area. Currently, Tesla is licensed to sell its vehicles in 20 states.
In supporting the bill, GM argues Tesla — and other potential EV-only automakers — currently have an unfair advantage because existing state law requires GM and other manufacturers have to use franchise dealers.
The battle became heated this week as Tesla rallied support while claiming GM actually wrote the portion of the bill that would force Tesla to use a traditional dealer retail model.
It’s a critical battle for both automakers, although they do not compete directly today. They will be going head to head as early as 2017 when GM’s new Bolt and Tesla’s Model 3 will be in the market.
A similar battle in Utah erupted this month after the state refused to grant Tesla with a dealer license last week because current state law prohibits manufacturers from selling cars to consumers. Tesla was set to open a brand new $3 million showroom in March. The ruling by the state’s attorney general means Tesla can only provide maintenance and service, but is prohibited from selling, discussing prices or even allowing customers from taking test drives.
Meanwhile, a new bill was introduced allowing Tesla to sell vehicles to customers in the state, but Tesla argues it creates unfair limits by prohibiting the manufacturer from keeping inventory in the state. Instead, Tesla would have to ship each order to the customer once a purchase was made.
Tesla, instead of fighting the battle in the legislature, filed a lawsuit this week in the Utah Supreme Court hoping to overturn the attorney general’s ruling.