Monday, 28 March 2016 14:21

Indiana Moves Forward on GM-Written Bill To Close Auto Sales Loophole, Sponsor: “Not About Tesla”

Indiana is seriously considering legislation that could lock Tesla out of the state—with a real possibility that Tesla will be prohibited from holding a dealer license in the state after 2017.

The Indiana Senate Committee on Commerce & Technology recently held a hearing on the bill in question —HB1254/Amendment 3, authored by GM—and held a follow-up meeting on February 25th, at the Capitol building.

The bill, authored by Rep. Kevin Mahan, R-Hartford City, could ban auto manufacturers from selling directly to consumers. The bill seems designed to shut down Tesla, the manufacturer of all-electric vehicles whose direct sales strategy runs counter to the traditional franchise dealer model. Tesla operates a showroom at the Fashion Mall at Keystone.

The House on Feb. 2 passed a version of House Bill 1254 that would send the issue to a study committee. But a proposed amendment to the bill would bypass a study. It “provides that a dealer license issued to a manufacturer expires after 30 months,” causing Tesla’s dealer license to expire in 2018.

“It’s not about Tesla. It’s about a level playing field,” Mahan said. “Tesla just happens to be the only manufacturer in the state working under this situation. But the thing is, with the technology forthcoming, not only in the United States, you could have another manufacturer pop up any time. So I’m trying to close this loophole.”

Indiana lawmakers are pushing the bill as Tesla is planning to unveil a product that will compete with a new all-electric vehicle from General Motors. Tesla earlier this month announced it will begin accepting pre-orders for its Model 3 car on March 31, with an expected delivery of late 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.