Tesla and General Motors are embroiled in a fight over legislation that could determine whether the electric-car automaker can continue to sell its vehicles in Indiana.
Tesla, which is presently licensed to sell cars in Indiana, is accusing GM of being behind a bill that would prevent Tesla from continuing to sell in the state. Unlike most automakers which sell their vehicles through franchised dealerships, Tesla sells its models directly to consumers from factory-owned stores.
Tesla has been selling cars in Indianapolis for two years. Republican Indiana State Representative Kevin Mahan recently introduced a bill that could change that. The bill states that a “dealer license issued to a manufacturer expires after 30 months and may not be renewed.” That means that if the bill passed and Tesla wanted to continue to sell cars in Indiana after 30 months, the company would have to find franchised dealers to work with.
Automotive News reports that Tesla has said lobbying from GM helped create bill. Both automakers are planning on launching low-priced EVs in the next year. The legislation is specific to EV manufacturers.
“I want Tesla here,” Mahan said on Jan. 27 at a hearing of the Indiana House Roads and Transport Committee. “But they need to have a dealership. This bill gives them two-and-a-half years to put a dealership system in place.”
Tesla has gone on record saying that GM is behind the proposal, and that it believes that GM wrote the bill. A spokesperson for Mahan told Automotive News that GM had “input” but did not write the bill.
Mahan is an insurance-agency owner who works a legislator part-time (Indiana’s legislature is part time), and his district is mostly rural, located to the northeast part of the state capital of Indianapolis.
“I want Tesla to put a dealership system in place,” Mahan told Automotive News in an interview. “This is about protecting my constituents. If someone wants to spend over $100,000 on a car, that’s one thing. But when you are talking about a car costing $30,000 or $40,000, consumers ought to be able to drive to their local dealer and have a face-to-face conversation.”
“This is nothing more than a protectionist effort by General Motors,” said O’Connell at the January hearing of the Indiana House Roads and Transport Committee. “General Motors made a decision in the early part of the last century about their business model. I see no reason why, under general free-market principles, Tesla shouldn’t have that same right.”
Critics have said that Tesla itself is being a bit hypocritical, as it has benefitted from public funding and green-car credits which are not the result of free-market principles.
Jason Wetzel, a regional manager of public policy for GM, was more supportive of the bill. “We welcome competition from any manufacturer,” Wetzel said, according to Automotive News. “Competition in a fair market only works when the same set of rules are applied to all participants. That’s what our bill would do. What we’re asking is: If you’re a manufacturer, you can’t own a dealership. We can’t, Ford can’t, and we’re just saying that is the way the market is set up and that’s what works best.”
The bill passed in the Indiana House easily, but some representatives sided with Tesla.
“I call this the ‘Kill Tesla’ bill,” said Rep. Curt Nisly, a Republican from Goshen who attended the hearing on January 27. “GM testified in favor of the bill. So did the auto dealers. I didn’t see anyone from Chrysler and Ford. We should be welcoming Tesla to the state of Indiana, not chasing them out. I’d like to see them build their next gigafactory here.”
Tesla has fought battles on behalf of its business model in several states. The company turned to owners and other supporters to rally on its behalf, by encouraging Tesla fans to attend hearing of the Indiana Senate Commerce and Technology Committee that took place Thursday. The legislative session closes on March 14.
“Let your voice be heard before that hearing to let them know that Indiana should encourage innovation, economic growth and consumer choice,” Tesla penned in an open letter to consumers. “Don’t let GM tell you that your only option is to buy a car from a traditional franchised dealer by shutting out Tesla.”