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Tesla Motors Inc (TSLA) Trying To Kill the Utah ‘Tesla Bill’

Tesla motors inc (NASDAQ:TSLA) Tesla Model 3

Tesla Motors Inc (NASDAQ:TSLA) officials will ask the Utah Legislature today to kill the so-called “Tesla bill.” The EV firm believes the bill was creating more obstacles than it was solving, says a report from the Salt Lake Tribune. This is really surprising as the bill would have allowed the EV firm to sell cars directly in the state, something that its fighting for in several states.

Tesla motors inc (NASDAQ:TSLA) Model 3

Special license, but with limitations

Rep. Kim Coleman, R-West Jordan, who worked for over a year to negotiate a deal between Tesla, representatives of Utah’s auto dealers and big car makers, thought she finally pulled it all together. But, all of her efforts proved futile after she released the bill last week.

The electric car maker says it would rather take its chances with the case still pending in the Utah Supreme Court than see Coleman’s HB384 pass as it imposes unrealistic restrictions on the carmaker’s operations. Todd Maron, Tesla’s corporate counsel said, “We don’t want to be invited into the state and then be told we need to have one hand tied behind our back in serving customers.”

All this was triggered, when the state refused to allow Tesla (NASDAQ:TSLA) to open its showroom in South Salt Lake, saying the law requires manufacturers to work through franchised dealerships. Coleman proposed a bill that would have given a new kind of license to the direst sellers, but Maron thinks it would only generate more problems.

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“That works now because right now we’re a pretty small manufacturer and we custom-build all our cars in our factory in California,” Maron said. “But you can imagine that one day, like any company out there, we might want to tweak or change how we conduct business.” The bill also restrict the potential buyers from signing any financing documents at the Tesla showroom.

However, Coleman argues that legislative attorneys told her that financing is a separate transaction, and is not governed by current law. “The bill doesn’t speak to that so it doesn’t prohibit it,” she said. Coleman, who is blaming Tesla for changing its demands, plans to push forward with her bill, which according to her, will help other auto makers with business models similar to Tesla such as Utah manufacturers like Vanderhall Motor Works, who makes high-end three-wheeled motorcycles, and Kirkham Motorsports, who builds custom roadsters.

GM – a backstage opponent to Tesla

GM not only beat Tesla to market with its first mass-market 200-mile EV car, it also attempted to influence how Tesla gets to sell its products. GM has been a backstage opponent to Tesla’s factory direct sales model in states including Ohio, Michigan, Maryland, Indiana, and Connecticut. Of all the automakers, GM may be the most audible in making its views known to legislators at important moments.

In Indiana last week, the legislation (which the electric carmaker accused GM helped in crafting) that threatened Tesla Motors Inc (NASDAQ:TSLA) to go the franchised dealer route was dropped. The reasons cited by legislators was a wide media coverage and opposition from Tesla fans.

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Aman Jain

Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.
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