ST. PAUL, Minn. — The Minnesota Automobile Dealers Association (MADA) dropped its bill to prohibit electric-carmaker Tesla Motors from opening in the state. The decision was made when state lawmakers approved an amendment by Tesla, which the MADA says would have certainly opened the door for Tesla to establish its proposed locations there.
According to the state dealer association’s website, “MADA legislation, SF679/HF774, would make clear the long-standing intent of a Minnesota law that a motor vehicle manufacturer is prohibited from selling a vehicle directly to a consumer outside of a franchise agreement with a motor vehicle dealer.”
The bill was introduced when Tesla Motors announced its intentions to open a location at the Mall of America, as well as a service facility in Edina, Minn. Minnesota’s Senate Transportation Committee approved an amendment last week, which specifically exempts the franchise system for Tesla and allows the automaker to sell directly to consumers.
“MADA is extremely disappointed at this development,” the association stated on its site. “The franchised dealership system ensures that there will be competition in the marketplace for new vehicles. Allowing a factory-owned store clearly undermines the rules on which Minnesota dealers have relied when investing billions in their businesses, and gives a single company an unfair advantage.
“After the Senate Transportation Committee adopted Tesla's amendment, the bill would not have been able to advance without Tesla's special provision attached. The MADA decided to drop the bill rather than risk passage of the provision that would have ensured Tesla’s right to open a factory store. The MADA will pursue other options outside of the legislature to fight Tesla’s efforts to end-run the franchise system in Minnesota.”
Tesla continues to stick behind its business model, which has spurred lawsuits from dealer associations in Illinois, Massachusetts, New York and Oregon.
Last fall, Tesla CEO Elon Musk posted in a blog: “Automotive franchise laws were put in place decades ago to prevent a manufacturer from unfairly opening stores in direct competition with an existing franchised dealer that had already invested time, money and effort to open and promote their business. That would, of course, be wrong, but Tesla does not have this issue. We have granted no franchises anywhere in the world that will be harmed by us opening stores.”
A judge in Massachusetts sided with Tesla in early January when it dismissed a lawsuit filed by the Massachusetts State Automobile Dealers Association (MSADA). The association filed a subsequent suit against the Town of Natick’s Board of Selectmen for allowing Tesla to operate a retail outlet within Natick. Rulings for suits filed in Natick and the three other states are still outstanding.