Indiana wants to ban large car manufacturers from selling directly to the public, a move that would effectively stop Tesla from selling its cars, as Elon Musk’s electric vehicles never pass through a third-party dealer. House Bill 1592, set to receive its first committee hearing on Wednesday, is very similar to a bill the state tried to pass last year that received backlash from Tesla fans.
The new bill, sponsored by Republican Ed Soliday from Valparaiso, stops car manufacturers from directly selling to consumers after its licensed location in Indiana has sold over 1,000 cars in a year, or if six years have passed since the initial license to sell cars in the state was granted, whichever condition comes first. Tesla has been operating a store in Fashion Mall, Indianapolis, since December 2013: even if the company didn’t fall foul of the sales limit, the store would need to close in three years’ time.
The company runs a website, Free Market Indiana, that lists the reasons why Tesla’s business model is compatible with Indiana laws. The site explains that direct sales are only prohibited in Indiana if the manufacturer is seeking to compete with affiliated franchises, but as Tesla has no affiliates, it’s free to sell directly to consumers. Manufacturers are pushing Tesla to work on the franchise model, but the company appears unwilling to change and suggests that if Tesla was not allowed to operate in its current model, it would simply leave the state.
The website was originally set up in response to a prior bill, which passed the House in February 2016, that would have forced the company to establish dealerships in the state. The bill, sponsored by Republican Kevin Mahan from Hartford City, was supported by General Motors.
A Tesla Model S car on display in 2013 in California. The company has sold cars in Indiana for over three years.
“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,” General Motors said in a statement about the previous bill. “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.”
Last year’s bill ultimately died in the Senate after it was sent to “summer study.”
Indiana is not the only state that has pressurized Tesla over its business model. In fact, the company has come up against serious opposition in Michigan, the home state of General Motors. The company is currently unable to sell cars there thanks to laws that limit direct consumer sales, and Tesla is currently suing the state for what it perceives as a law designed “to reward the dealers’ generous lobbying efforts by handing them a monopoly.”
