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Labourers work on the exterior of a new Tesla showroom in Shanghai, April 22, 2014. U.S. electric carmaker Tesla Motors Inc expects to invest "hundreds of millions of dollars" building charging outlets in China, which could become its biggest global market next year, billionaire co-founder Elon Musk said. Picture taken April 22, 2014. REUTERS/Stringer (CHINA - Tags: TRANSPORT BUSINESS) CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA - RTR3MA89 Labourers work on the exterior of a new Tesla showroom in Shanghai, April 22, 2014. U.S. electric carmaker Tesla Motors Inc expects to invest "hundreds of millions of dollars" building charging outlets in China, which could become its biggest global market next year, billionaire co-founder Elon Musk said. Picture taken April 22, 2014. REUTERS/Stringer (CHINA - Tags: TRANSPORT BUSINESS) CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA - RTR3MA89  

Pro-Tesla Bill In Pennsylvania Angers Fellow Automobile Manufacturers

Giuseppe Macri
Tech Editor

The trade group representing the majority of auto makers in the U.S. has finally stepped into the fray between Tesla Motors and franchised car dealers.

The Alliance of Automobile Manufacturers joined the fight against Tesla’s direct sales model this week over a bill in the Pennsylvania legislature, which would allow the California-based electric auto manufacturer to sell cars free of franchise laws, but forbid all other manufacturers from doing the same.

Pennsylvania Transportation Committee Chairman and Republican State Sen. John Rafferty Jr. proposed the bill Monday according to the Wall Street Journal, which brought the alliance out of its neutral stance. Franchised dealers claim Tesla’s sales model gives the company an unfair advantage over traditional car dealers, whom have to purchase cars from producers and resell them to the public.

Tesla is not a member of the lobbying alliance, though all other manufacturers with U.S. operations are.

The alliance didn’t echo the concerns of dealers, and said its only reason for intervening in Pennsylvania was to assert that Tesla shouldn’t be given a privilege that all other companies are forbidden from having.

“Automakers have not objected to special provisions in various states that allowed Tesla to operate outside the current dealership system because those provisions were very limited,” the alliance said in a statement referring to deals in Ohio and New York, which establish a cap on the number of Tesla dealers.

“This bill is different. The Pennsylvania bill provides a wide open door for a single automaker to escape state franchise laws, even when that automaker is the sales leader in its product segment.”

The bill doesn’t actually grant sole permission to Tesla – any company ”trading solely in electric vehicles” is exempt from franchise laws. Tesla is, however, the only company currently doing so.

King of Prussia already has the state’s first Tesla dealer, and another is on its way to Devon. Tesla is still fighting battles in Texas, Arizona and New Jersey over opposite legislation, which restrict car sales exclusively to franchised dealers.

Tesla’s state-by-state battle will likely continue, as the company’s direct-sales business model does not require franchised dealers to sell its $70,000-plus Model S, which buyers must submit to a waiting list to acquire.

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