Tesla bill gets hearing Wednesday

By Shelby Mullis

INDIANAPOLIS — Legislation that would prohibit auto manufacturers from selling directly to the public will get its first committee hearing on Wednesday.

House Bill 1592 is similar to legislation proposed last year by Rep. Kevin Mahan, R-Hartford City, that would have compelled manufacturers to sell their vehicles through a dealership.

“For the average Hoosier, purchasing an automobile can be daunting and a big investment,” Mahan said. “A greater variety of vehicles are now available and can be brought directly to consumers virtually anywhere in the country. In the event of a recall or malfunction, consumers should be protected.”

The new legislation, sponsored by Rep. Ed Soliday, R-Valparaiso, specifically bars direct customer sales if more than 1,000 vehicles are sold or six years after the initial dealer’s license is granted.

The legislation affects Tesla Motors most directly because it sells its electric vehicles directly to consumers while other manufacturers, from General Motors and Ford to Subaru and Toyota, sell through dealerships.

Mahan’s original bill was sent to an interim study committee that heard testimony in September.

Tesla Motors, Inc.’s Vice President of Corporate and Business Development Diarmuid O’Connell testified against the measure.

“Tesla does not operate through some kind of loophole in Indiana law,” O’Connell said. “The current law is explicit in Tesla’s ability to sell directly and, as written today, it is not broken.”

In Indiana, an auto manufacturer is not allowed to open a store in direct competition with an affiliated franchised dealer. O’Connell said Tesla does not have any franchise dealer in Indiana, but instead has always sold directly to consumers.

O’Connell said the car manufacturer’s presence in the state has “brought only good to the consumer welfare without harming anyone — not even the dealers.”

Harry Tepe, owner of Tom Tepe Auto Center in Milan, supports legislation that would further protect consumers in the auto industry, while also generating that so-called “level playing field.”

“We just want to make sure there are protections in place for the consumers,” Tepe said. “The issue at hand is that the loophole is still open that allows any manufacturer to come in and market a vehicle and sell directly to the public without having any protections in place for the consumer.”

Tepe said dealerships are responsible for being a liaison between the consumer and the manufacturer, and argued that dealerships create several thousand jobs for Hoosiers across the state and also assist in collecting the state’s sales tax.

HB 1592 will be heard by the Roads and Transportation committee.

Shelby Mullis is a reporter for TheStatehouseFile.com, a news website powered by Franklin College journalism students.

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