Tesla Fan 'Incivility' Forces Indiana To Back Off Direct Sales Ban... For Now

from the lessons-never-learned dept

We recently noted how Indiana was just the latest state to try and pass auto industry-backed bills banning Tesla's direct-to-consumer sales model. Under the latest GM-backed bill, Tesla's dealer license would have expired in 2018, forcing the company to embrace the traditional franchise dealership model -- or stop selling cars in the state entirely. Telsa had been reaching out for the last few weeks to Tesla fans in the state, quite-correctly highlighting how GM was buying protectionist law instead of competing.

Apparently the public attention worked, as the Indiana Senate Commerce and Technology Committee has tabled the bill for the time being, meaning Telsa can continue operating its showroom in the state -- at least until the bill is reconsidered next year. Amusingly, one of the bill's key supporters, Senator Jim Buck, says he received some "incivility" from Tesla fans because of his proposal:

Buck on Thursday opened the committee hearing by saying he has been on the receiving end of "incivility" from Tesla supporters this week, as the bill received national attention. Buck and the bill's author, Rep. Kevin Mahan, R-Hartford City, agreed to put the issue before a study committee. ​That means the legislature won't consider a ban on direct auto sales until at least next year. "We are trying to make what we are doing here fair to all," Buck said.

Right, what Buck experienced wasn't incivility (though I'm sure the e-mails weren't particularly nice), it was the public telling Buck clearly to stop being a protectionist jackass willing to shovel forth horrible legislation at the behest of legacy industry lobbyists. While Buck's at it, he may want to avoid adding insult to injury by trying to falsely equate protectionist cronyism with "fairness." Telsa has made it pretty clear that GM's bill is predominantly aimed at lessening the competitive threat faced by its upcoming electric car, the Chevy Volt:

"General Motors is trying to kick us out of the state for purely competitive reasons," said Todd Maron, general counsel for Tesla. "Their Chevy Bolt will be competing against our mass-market car, so they have timed this bill specifically so once we start selling the Model 3 against their Bolt, we can no longer sell in the state."

That this kind of nonsense persists in state after state says volumes of the integrity of the state legislative process, and the politicians that pay endless lip service to competition and innovation, yet do their best to hamper it if the price is right. Again, if you're a politician looking to avoid public "incivility," one easy way to accomplish this is to stop letting legacy industries write shitty state law.

Filed Under: car dealerships, cars, competition, indiana, jim buck, kevin mahan
Companies: gm, tesla

Tesla Says GM Pushing Indiana Bill To Kill Direct-To-Consumer Tesla Sales

from the regulation-is-bad,-unless-it-helps-me dept

As we've documented extensively, the auto industry has worked tirelessly to erect barriers to Tesla's market entry. Legacy automakers have been engaged in sustained hysterics specifically regarding Tesla's direct-to-consumer sales model, which lets customers buy vehicles directly from Tesla online, with limited showrooms to view, touch and test drive the Tesla vehicles. Annoyed by this pesky Californian upstart, the auto industry has frequently tied draft legislation to campaign contributions to ban Tesla's successful model. Why compete when you can cheat?

Undaunted by criticism of this practice in numerous states, Tesla says GM is now trying the same thing in Indiana. In a new letter sent to Tesla "owners and enthusiasts" in the state, Tesla warns that Indiana's HB1254 would once again try to ban direct-to-consumer auto sales in the state:

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 $42M 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.

In other words, it's another legacy company deriding regulation at every opportunity -- except when it protects it from having to actually compete. While Tesla tells Ars Technica that it has no direct proof GM authored the bill, as we've seen in telecom, legacy companies all but own many state legislatures. Legislatures that are happy to shovel forth any and every bill (usually middle manned by groups like ALEC to present the feeblest attempt at propriety) provided the price is right. Tesla notes that GM could mirror Tesla's direct to consumer sales model, but would rather erect new barriers to entry than actually compete.

GM seems relatively unfazed by the fact that the FTC last year slapped Michigan for trying the same thing. Ask GM, of course, and the narrative changes dramatically. The legacy automaker tried to tell Ars that it's Tesla that's trying to craft special rules for itself, despite the fact that GM is the one pushing for the rule changes:

GM supports HB 1254. GM believes that all industry participants should operate under the same rules and requirements on fundamental issues that govern how we sell, service and market our products. A benefit of a nationwide network of thousands of dealerships is that General Motors customers never have to worry about driving to another state to buy, service or support their vehicles.

Tesla's insistence on special rules could result in multiple manufacturers competing with similarly capable vehicles and similar price points, yet operating under a different set of rules. Tesla could open a franchised dealership with an independent operator in Indiana today, but instead they insist that the State must first provide them with unique rules and special exceptions to suit their own business interests. In fact, Tesla was willing to agree to a dealer model in Virginia. The Indiana legislature shouldn't create a special exemption for them here.

Of course that's crap, and GM is turning logic on its head. Tesla has been operating a showroom in the Fashion Mall storefront since December 2013. It's GM that could follow Tesla's lead (like some Seattle Honda and Toyota dealers) and push for direct-from-manufacturer sales, but would rather use our broken legislative process to protect the status quo franchise dealership system. This has been an ongoing headache for Tesla in states like New Jersey, Texas, Arizona and especially Virginia, where auto-industry laws prohibited the company from opening a simple showroom.

Be it telecom or the auto industry, the fact that legacy industries can still write and buy anti-competitive state laws is a problem we simply refuse to fix.

Filed Under: car dealerships, competition, indiana, innovation
Companies: gm, tesla