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Tesla Wins First Round in Fight with GM

Bill forcing Tesla to use dealers tabled until summer.

by on Feb.26, 2016

Tesla CEO Elon Musk won the first battle with General Motors in Indiana about franchise dealer laws.

Round one of the fight between Tesla and General Motors over the EV maker’s ability to sell cars in Indiana without a dealer network has gone to Elon Musk.

Indiana lawmakers essentially tabled a bill put forth by State Representative Kevin Mahan that would have required Tesla to establish franchised dealers. GM helped Mahan craft the bill.

The Last Word!

However, a state Senate committee voted to send the bill to a “summer study” session, which put it on ice, allowing Tesla to carry on business as usual.

“We look forward to participating in the upcoming summer study process where we will be able to fully air the issues of vehicle sales and consumer choice in an open and public forum,” Tesla said in a statement.

GM said it was pleased that there was discussion about the “inequity” of everyone not playing by the same rules.

“We will continue to work on this issue in Indiana and nationally, and will continue to express our concern anywhere we find market participants are operating under different rules,” the automaker said.

This has been an ongoing wrestling match between Tesla and other automakers. In many states, Tesla is unable to sell vehicles because automakers must use an independent dealer network to sell vehicles.

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However, in the dozens of states where Tesla has been setting up shop in malls and other unconventional locations that automakers cannot, they have been crying foul.

Decades ago, automakers were allowed to sell vehicles directly to the public. In fact, they often did this in competition with dealers. However, dealers couldn’t match the pricing that buyers could get by purchasing direct from the carmaker.

Additionally, the automakers weren’t always very good at other parts of the ownership experience, in particular, service.

Ultimately, most states acceded to pressure from dealers and force automakers out of the direct sales business. However, since Tesla has shown up, it has skirted the franchised dealer laws contending that, in essence, they couldn’t sell their cars if forced to use dealers because the expense would be too great.

In the case of Indiana, the company has a store in a mall in a suburb of Indianapolis. If the measure put for by Mahan had been passed, Tesla would have kept its license until 2018, but then would have been forced to use an established dealer network or stop selling cars in the Hoosier state.

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2 Responses to “Tesla Wins First Round in Fight with GM”

  1. G Sica says:

    Telsa is a vehicle that you do not go and compare it to other car nor look over the used cars lot. Thier not the typical buyer who wants to kick tires. If Apple can have stores in malls and bypass their local franchises and sell millions of iphone and ipads, Telsa should also be able to do the same.

  2. Vic says:

    I think the dealer’s argument falls short in that Tesla never set up any dealer network, so there is no direct competition with anyone, unlike GM and their dealers.

    It’s the dealer’s greed that is trying to twist the arm of Musk to spread the wealth. I support what Tesla is doing and hope other people do as well