Tensions between US automakers GM and Tesla are now at an all time high. GM took a few swipes at Tesla at the unveiling of the 200 mile range Chevy Bolt earlier this year. The automaker published a promotional picture of the new all-electric car in front of Tesla’s headquarters in Palo Alto and CEO Mary Barra made the following comment during the CES launch:
“Unlike some EV customers, Bolt EV customers never have to worry about driving to another state to buy, service or support their vehicles.”
She is clearly making reference to the fact that Tesla is somehow still blocked from selling vehicles in certain states due to laws banning direct sales from manufacturers which force them to go through third-party dealerships. These laws are often from the 1950s when the US automakers would exert monopolistic control over the dealer relationships. Tesla General Counsel Todd Maron went before the FTC to argue against these direct sales bans and directly called out Barra for her comment (see picture above), which becomes more relevant than ever now that we learn that GM has authored a new bill to ban direct sales in Indiana.
The amendment 3 of bill HB1254, authored and pushed by General Motors according to Tesla, would make it illegal for any manufacturer to hold a car dealer license in the state after 2017, which would effectively ban direct sales of vehicles and force consumers in Indiana to buy vehicles through third-party dealerships.
Barra’s comment becomes particularly interesting as she is now seen as taunting Tesla about a constraint her own company is actively trying to impose on consumers.
Of course, the counter-argument is that GM is “only trying to make sure that everyone plays by the same rules”, but the problem is that the main reason why these laws were even created in the first place was to protect franchise dealerships against unfair competition from their own manufacturers, like GM, but not against outside competition, which would be against all the principles of the free market.
Tesla never had a contract with a third-party dealership and therefore is not in conflict in opening its own stores. It would be the same thing for any new manufacturer trying to bring a vehicle to market, like Elio Motors for example.
GM has a lot of influence in Indiana. The automaker operates several facilities in the state including a large powertrain plant in Bedford. If GM wins in Indiana, it could use the momentum to try to push similar constraints on consumers in other states and change the future of the car buying experience, which consequently could stifle innovations that require more malleable methods of distribution.
Tesla says that the new bill would effectively shutdown its operations in the state. It already has a valid dealership license for its store at the Fashion Mall at Keystone and it has plans to build a service center.
The company sent out a letter asking supporters to reach out to Senators and members of the Indiana Senate Committee on Commerce & Technology and ask them not to shut down Tesla. The committee is holding a hearing on Thursday at the Capitol building.
Here’s the letter Tesla sent to owners and enthusiasts on its mailing list in Indiana:
Tesla Owners and Enthusiasts:
We need your help. Yesterday, the Indiana Senate Committee on Commerce & Technology held a hearing on a bill that would shut down Tesla in the state. Authored and pushed by General Motors, HB1254 with amendment 3 would prohibit any manufacturer from being able to hold a dealer license after December 31, 2017. Existing law allows ANY manufacturer to apply for a dealer license without the use of independent franchised dealers. Despite having a lawfully granted license to sell Tesla vehicles directly since 2014 at the Fashion Mall at Keystone; despite contributing over $42 million to the state through the purchase of parts and components from Indiana suppliers; and despite plans underway to construct a 26,000 square foot Tesla Service facility that will employ approximately a dozen Indiana residents and serve our customers, GM is pushing the Senate Committee to shut out Tesla.
Here’s how you can help: please contact your local Senator – and if you live in one of the districts covered by any of the following Committee members, we urge you to reach out and let them know they should not shut out Tesla. You can find your Indiana legislators here.
- Chairman Buck: Senator.Buck@iga.in.gov , (317) 232-9466
- Senator Merritt: Senator.Merritt@iga.in.gov, (317) 232-9533
- Senator Delph: Senator.Delph@iga.in.gov, (317) 232-9541
- Senator Head: Senator.Head@iga.in.gov, (317) 232-9488
- Senator Houchin: firstname.lastname@example.org, (317) 232-9814
- Senator Leising: Senator.Leising@iga.in.gov, (317) 232-9493
- Senator Tomes: Senator.Tomes@iga.in.gov, (317) 232-9414
- Senator Breaux: email@example.com, (317) 232-9534
- Senator Broden: firstname.lastname@example.org , (317) 232-9849
- Senator Randolph: email@example.com, (317) 232-9432
A follow up hearing will be held next Thursday, February 25, 2016, at the Capitol building. Let your voice be heard before that hearing to let them know that Indiana should encourage innovation, economic growth and consumer choice. Don’t let GM tell you that your only option is to buy a car from a traditional franchised dealer by shutting out Tesla.
Thank you for your support and willingness to help Tesla stay and grow in Indiana. As always, when communicating with legislators, please be polite and respectful. Personal attacks should be absolutely avoided as they will only hurt our cause! Thank you again.
Our recent coverage of Tesla Motors:
- A look at the team of “hardcore” engineers building Tesla’s Autopilot and the exodus that followed its release
- Tesla is implementing a new custom end-to-end platform called ‘Tesla 3DX’ to ramp up for the Model 3 and Tesla Energy
- Tesla signs a lease for a 40,000 sq-ft showroom and service center in Brooklyn, NY