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In Tesla sales fight, automakers take the dealers' side

In Tesla sales fight, automakers take the dealers' side

The fight between Tesla Motors and the nation's new-car dealers has only picked up intensity in the wake of New Jersey's ruling earlier this month that will force Tesla to shutter its stores there by April 1. Tesla chief executive Elon Musk has vowed to fight on; New Jersey Gov. Chris Christie has backed his administration's call, and dealers have pushed forward with their campaign to tighten franchise laws.

But there's another side to the squabble — the automakers, which in hearings around the country have begun to make their arguments heard. And it's not good news for Tesla.

Earlier this month, Ohio state senators met to further debate a bill that would bar Tesla from expanding beyond the three factory stores it has in the state, unless it opted to use dealers. (In a blog post last week, Musk cited franchise dealers' favoritism toward established players as one reason why most start-up automakers fail.)

Among those who weighed in to Ohio lawmakers: General Motors. GM head of public policy Selim Bingol sent a letter to the state lawmakers and Ohio Gov. John Kasich saying GM believed Tesla should have to use independent dealers just like any other automaker, and that an exemption amounted to "a distinct competitive advantage."

"We do not support Tesla being exempt from providing the same type of service we have to provide in Ohio — servicing cars and warranty," GM officials said in another communication. "Tesla is an automobile manufacturer, they compete with our vehicles in the market and they should compete under the same laws we do."

While GM's strongly worded opposition could be seen as an automaker defending its backyard, it's not alone in its stance. On Wednesday, lawmakers in Arizona debated a bill that would let Tesla open factory-owned stores — a bill that's been pushed with an eye toward Tesla's consideration of Arizona as a contender for the location of a massive new battery plant. This time, the objection came from an industry trade group

"Tesla is asking for a special exemption for them to have a separate set of rules for their electric cars," Mike Gardner, a lobbyist for the Alliance of Automobile Manufacturers, told the Arizona Senate committee according to the Associated Press. "What we're opposed to is allowing one of our competitors to go around the dealer network and sell directly to consumers. We think we should all be treated the same."

The AAM's comments against Tesla hold special significance. The trade group's 12 members include the world's three largest automakers — GM, Toyota and Volkswagen — along with Ford, Chrysler, Mercedes-Benz and others. Because of its broad membership, the Alliance only weighs in on issues where its members have wide agreement on a position. (Toyota is even a customer of Tesla's, relying on it for battery packs in the electric version of the RAV4 SUV.) That it's fighting Tesla at the state level signals just how seriously the rest of the industry takes Musk's march.

It was only a few years ago that GM and Chrysler sought to shed hundreds of dealers in their bankruptcies, with the companies and U.S. government overseers arguing that the automakers could potentially save billions of dollars. Those claims never panned out; most of the dealers who were closed either reopened or won a settlement, and since then dealers and automakers have enjoyed the boom in new-vehicle sales. It's true that automakers prop up dealers in a variety of ways — from inventory financing to paying for local TV ads — with money that Tesla doesn't have to pay for its factory stores. If the auto industry has it way, that won't last much longer.