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DOR permit for Tesla incites legislative response


JEFFERSON CITY, Mo. — HB1124 started as a seemingly simple bill with the intention to change laws that pertain to size and weight of ATVs, recreational off-highway vehicles, and utility vehicles. The Senate Substitute for the bill that left the House has many additions, including the requirement of franchise-based sale requirements for vehicles, prohibiting direct to consumer sales.

The bill passed the Senate as amended with 28 ayes and 3 noes on Wednesday.

“The language in HB1124, which was originally about all-terrain vehicles and other recreational off-highway vehicles, directly targets Tesla’s current and future operations in the State of Missouri,” said Diarmuid O’Connell, Vice President of Corporate and Business Development at Tesla.

Consumers can currently order Tesla vehicles online, from customization to financing.

The Motor Vehicle Franchise Practices Act was passed in 1980 as a consumer protection act to allow an equal opportunity for Missouri consumers to purchase a motor vehicle from the franchise dealer of their choosing. Direct sales were prohibited, and had been, until Tesla was granted their dealer license by the Department of Revenue over 30 years later.

“For more than thirty years,” said Missouri Auto Dealers Association President Doug Smith, “Missourians have purchased their vehicles through our current franchise system which protects consumers and promotes market competition. Simply put, the system has worked for Missouri businesses and consumers.”

Soon after Tesla was granted a dealer license in 2013, the Missouri Automobile Dealers Association had representatives meet with DOR to discuss the dealer license being in violation of statutes regarding manufacturer franchises. The amendments proposed clarify the role and ability of the franchisor, legally clarifying that direct to consumer sales are prohibited by manufacturers.

Sen. Mike Kehoe, R-Jefferson City, and Reps. Todd Richardson, R-Poplar Bluff, and Caleb Jones, R-California, wrote letters to DOR requesting information as to why the permit was granted to Tesla in relation to the current state laws.

“It is clear under Missouri law that traditional manufacturers who already have franchised dealerships in the state may not sell cars directly to consumers. It is not clear that the statues apply to a seller like Tesla, which apparently has not entered into franchise relationships with independent dealers,” Acting Director John R. Mollenkamp responded in a letter.

The Tesla Motors Team issued a blog post on Thursday calling the new form of the bill a “last-minute attempt by the auto dealers lobby, via pressure on legislators, to bar Tesla from selling its vehicles direct to consumers in the state.”

BluntA“The public policy has been clear in Missouri for 30 years, automobile manufacturers do not sell directly to consumers,” Andy Blunt, said. Blunt has lobbied for the Missouri Automobile Dealers Association for 9 years.

By Friday, Tesla had hired 10 lobbyists to work on their behalf so that the company could continue to sell cars in Missouri. Several of those lobbyists shared that they are not under contract with Tesla, but the language changes affect their other clients, raising other alarms. After extensive media attention, Tesla hosted a conference call for Missouri media on Monday. Later Monday, 14 Tesla owners  brought their cars to the Capitol and lined them up outside. Most of the Tesla owners were from Missouri, but some were from Illinois.

“This extraordinary maneuver amounts to a sneak attack to thwart due process and hurt consumer freedom in Missouri,” Tesla said in their blog post.

“Tesla Motors has used a loophole in the law that has allowed them to sell their cars with an unfair competitive advantage that strips the consumer protections that have been in place for over three decades,” Smith said. “House Bill 1124 would simply ensure that the current franchise system is consistently applied to all companies who sell cars in Missouri.”

“These changes clarify the law for automobile sales and puts everyone on the same page. There should not be two sets of rules,” Blunt said. “The dealers that are in Missouri create a huge economic impact for their local communities and they provide a great service to consumers. Local car dealerships allow customers to shop around for the best deal, as well as protecting consumers in recall and warrantee issues related to the manufacturer.”

DOR – Tesla Response

Letter from Richardson to DOR