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Tesla escapes ban in Indiana by being ‘grandfathered in’, but the state moves forward with ban on direct sales

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As we have been reporting during the past few days, Indiana’s legislature has been pushing for a new ban on direct vehicle sales by automakers that would have forced Tesla to stop its operations in the state or to go through third-party dealerships – something the company refuses to do.

After a public hearing yesterday where several consumers and Tesla representatives expressed their concerns over the bill, they introduced a new amendment that  “grandfathered in” Tesla. The house bill 1592 was then approved 9-1 in the Roads and Transportation committee earlier this morning.

State Rep. Ed Soliday, who introduced the bill, insisted that it had nothing to do with Tesla even though it would have been the only company affected by the change. He confirmed today that the amendment was specifically crafted to “grandfather in” Tesla:

“It’s very clear – it’s not ambiguous – no auto manufacturer may sell directly to the public. Then, we grandfathered in Tesla and any manufacturers of motor vehicles that registered before July 1st, 2015. We don’t think there are any other (manufacturers) out there, but this makes certain that we are only allowing this kind of sales with people that have demonstrated consumer service and accountability.”

While the committee approved the bill as amended, it will still have to go to the house.

It would put Tesla in a special position where direct sales of vehicles in the state is banned, but the company would be the only automaker exempt from it. In other words: a win for Tesla, mostly a win for dealerships, and a loss for the free market.

Here’s the meeting for introducing and passing the amendment earlier this morning (hat tip to /u/rabidchinchilla on Reddit):

As we reported in our article about the public hearing yesterday, a representative from the auto industry supported the broader ban on direct sales, but it’s not clear if it would still be the case now that Tesla is exempt from it with the new amendment.

Tesla is safe from the ban since it registered for a vehicle sale license before July 1st, 2015, and as long as it “establishes at least one (1) physical location in Indiana that is a warranty repair service center before January 1, 2018.” A service location in Indianapolis is already planned.

Update: A Tesla spokesperson sent us the following statement:

“Tesla applauds Chairman Ed Soliday and the members of the Roads and Transportation Committee for amending this legislation to allow Tesla to continue investing and growing in the Hoosier state.”

Here’s the amendment:

[scribd id=338222680 key=key-IgVDI1pYBwO7J88aRTWi mode=scroll]

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