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: email@example.com, (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: firstname.lastname@example.org, (317) 232-9534
- Senator Broden: email@example.com , (317) 232-9849
- Senator Randolph: firstname.lastname@example.org, (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.
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Well that does it, I’m definitely not going for the Bolt…GM ex CEO Lutz can’t stop bashing Tesla now they’re shaking in their boots
GM cant “Author a bill” how stupid are these tesla people?
Seriously? Corporations, or their lawyers or lobbyists, write bills all the time: http://www.npr.org/sections/itsallpolitics/2013/11/11/243973620/when-lobbyists-literally-write-the-bill
Corporations author bills every day of the week. What planet do you live on?
lutz were never their CEO!
My bad… He always seemed to talk like he was
If they have to fall to this level, instead of going for competition and providing a good product for the customers it’s very clear: I’ll never buy (another) GM product ever again!
If they go for manipulating laws, I’ll vote with my wallet.
Cheap oil is Tesla’s biggest competitor, not the Chevy Bolt
All the more reason to buy Model 3 over Bolt.
Reservations start March 31st
Made an account to comment, this is ridiculous as a soon to be graduate I was pining for a Bolt or a Model 3 whichever worked out cheaper and better for me. This is disgusting behavior from an automaker and I shouldn’t be surprised that its GM behind the behavior. I will be buying a Model 3 and forwarding my friends this article.
“banning direct sales from manufacturers which force them to go through third-party dealerships.”
So it’s not enough that the Tesla company uses offshore tax avoidance strategies to screw host nation’s citizens out of their tax base, but now they’re whining about not being able to cut out (dealership) middlemen too?! Why is Tesla so interested in contributing to the decades long war on the middle-class?
What level of profit will be enough for this company that gladly takes government subsidies while railing against gov’ts for giving out subsidies (to others)?!
It seems like the only thing Tesla is interested in disrupting is socio-economic stability.
Are you a troll for GM?
What “offshore tax avoidance strategies?”
“Whining about not being able to cut out (dealership) middlemen?” Let me know what you want to buy direct and I’ll be happy to act as middleman for you, taking a cut of everything you pay for along the way. Is that your preferred purchasing model?
Tesla takes no government subsidies (good thing GM, Chrysler, etc. never took any govt. money, right?). There is a tax credit only, which is applicable to all qualifying alt-fuel vehicles (including those made by GM).
“Disrupting socio-economic stability”. Now I’m sure you’re a troll. Or work for an auto dealership.
yes they do your wrong alan
Sorry, but seeing all situation from here, you know the “old Europe”, everyone can see that USA has the most obsolete and consumer harming law to sell cars IN THE WORLD! Sorry, but forcing a manufacturer to go to third-party dealership, is like ancient soviet farmers who was forcing to sell their production to Kolkhoz! Has USA a communist country?
The thing is, no one would drive to another state to buy a Chevy.
and no one could in a Bolt because of low DC charging rates….
My thoughts on this is Tesla has a business new model that works and people are willing to buy the cars because they have a product that is appealing. Why are people not buying Big 3 Electric Automobiles?
What this bill is saying to me is we have been doing it like this for ages, no need to change and do something that people want now, not ever.
good old GM so sad, i talk about your volt as much as the Tesla, but this is sad sad tactics and will make me think two times before looking at GM products
man now i got to hate GM and i was so liking the volt, but i hate this monopoly practices these big guys do to keep the electric car industry down
Case law is the best way to present a good argument. It provides the history of monopolies and violating the fare trade act. I suspect if they truly want to put GM in their place they need to pull up how Ford tried to stop GM completion when GM first came out or any other major car manufacture. Get your attorneys involved. They can try to make new laws but will fail. History can save Tesla is used correctly. The Monopolies of Ford. Jp Morgan and Rail Road systems all address state laws and crossing boarders as well as acting in best interest of consumers for fare trade. A dealership can not lock down a state blocking competition solely for the purpose of self interest. I’m not an attorney but case law will help Tesla in this fight
American capitalism at it’s best — If you can’t prevail on the basis of product offerings alone, stifle the competition by being “lawful”.
I don’t know why Tesla would not argue this law as being unconstitutional, because it would be in violation of the Commerce Clause. The Commerce Clause of the Constitution deals with interstate commerce.
I hate GM. I’ll never, ever buy a GM product.
This doesn’t surprise my since gm was also behind a bill to stop you from fixing your own car outside of a dealer especially dealing with the ecu, next time gm starts going under just let them die no more bail outs
huh you can take your car anywhere you want tohave it fix . Or fix it your self. Unless its warranty work then you have to take to dealer.
I like Tesla and Elon Musk, but this accusation is a load of crap. Anybody who has even an iota of knowledge of the auto industry knows that the manufacturers hate the franchising laws for the same reasons that Tesla does. It takes all control of the customer experience out of the manufacturer’s hands and puts it in the hands of the dealers. When customers are treated poorly by the dealers the manufacturers get blamed. Manufacturers have been trying to get rid of these franchising laws for decades. The authors of this bill are the Indiana State dealers and the Dealers Association. I am certain that GM has nothing to do with it.
Wrong. GM confirmed it supports the bill and has not denied the accusations of having authored the bill. They will take the stand at the hearing on Thursday so…
“The reality is when you sell millions of vehicles
Dealers have so many hidden charges and cost borne by its customers it’s ridiculous. One small example: “Dealer Prep. Fee” $500 to $1,000. Their preparations include removing the factory protective shipping wrapping, washing the car inside and out (hose, bucket, soap, rags and sponge + 30 minutes labor). Checking tire air pressure, transmission and motor oil levels, antifreeze, windshield washer reservoir and brake fluid levels. Removing price tags and stickers etc..
Also includes going over a checklist of items to see if the vehicle has any factory defects (if it has a factory defect upon delivery to the dealer the factory should pay for that). All minor or low cost items they lump together to over charge the buyer.
The added inflated dealer cost extras are endless: custom wheels and tires, sound systems, tinting, undercoating, clear-coat spray, mud flaps, deluxe floor mats, trunk liners, overpriced extended warranties, money-making (for them) factory financing and service contracts.
Read the fine-print car dealer sales contract carefully (or hire a lawyer to) and there are even more questionable “fees and charges” the consumer pays.
Won’t even go into the dealer’s smoke-and-mirrors of “super low trade in values, dealer invoice, factory incentives and factory volume sales kickbacks”.
Just because something has been around over a hundred years doesn’t mean it should last forever or that it is even a good thing.
Tesla may charge some of these above. But bet they will be more valid and add true value to the car buyer.
Since when has GM become or congress and senate and maker laws and bills.I must be missing something. GM runs our government too. I don’t think so.
Maybe they should contact GM about those dealer laws since they are running the government.
Indiana is full of crooked companies that design road vehicles to fail. The “Forest River” collection of travel trailers is an example. 90% lemons. GM is a dangerous company with an awful record. The company should be shut down permanently. I could care less about jobs. Safety is more important. And as a mechanic, I know GM’s game. They have been toying with the consumer for too long. Creating dangerous situations and huge annoyances for the sake of profits. They have no serious interest in satisfying the people. Only to use them for profit. Their rust bucket lemons needs to stay off the road for good. I would rather trust Korea over GM. And Toyota is still the only true “domestic” in America. Because they at least try to design their cars to last. GM is the biggest disgrace to USA.
Interesting you chose Toyota as a shining light in a discussion about BEV’s. Toyota have repeated their dislike of BEV’s time and again and refuse to make one having cancelled the RAV4 EV twice in as many decades.