GM Backstabs Tesla Motors in Ohio as NJ Legislators Try To Kill Anti-Tesla Rules

Early on Tuesday morning we broke the news that the New Jersey Motor Vehicle Commission would be voting later on that day to pass a new regulation making it illegal for Tesla Motors [NASDAQ:TSLA] to sell direct to customers in the Garden State. Later that day, we live-blogged with sadness as that regulation was passed without prior public comment.

GM doesn't want Tesla to sell directly to its customers, and it wrote to Ohio's Senate asking it to help.

GM doesn’t want Tesla to sell directly to its customers, and it wrote to Ohio’s Senate asking it to help.

Luckily for Tesla, two of the state’s top Democratic lawmakers are already scrambling to its aid with the promise to tackle the ruling through New Jersey legislature, hopefully overturning the NJMVC’s edict.

But over in Ohio, where there’s an ongoing battle between Tesla and Auto Dealer Association-backed senators trying to make Tesla stores illegal under state law. To make matters worse, General Motors has weighed in with written testimony against Tesla.

Yes, the company behind the Chevrolet Volt and Cadillac ELR range-extended EVs, the company highlighted for its crushing of the EV1, wants to help end Tesla’s business model of selling cars directly to customers.

According to Bloomberg (via Transport Evolved regular and EV advocate Chelsea Sexton), GM sent official written testimony to the Ohio State Senate Committee currently considering  Senate Bill 260, opposing outright the granting of any new dealer licenses to Tesla.

“Tesla is an automobile manufacturer, they compete with our vehicles in the market,” the Detroit giant said. “They should compete under the same laws we do.”

On one level, it’s easy to see how General Motors, an established automaker with years of experience in doing business with auto dealer associations, might feel threatened and perhaps perplexed that a young upstart company from California isn’t following the status quo of the automotive world.  One might even be tempted to empathise that GM, a company with a long and glorious rapport with dealers all over the U.S., might feel enraged by the said upstart’s impertinence and stand up for its small, defenceless dealers.

GM says Tesla's buisness model is unfair. What do you think?

GM says Tesla’s buisness model is unfair. What do you think?

Yet GM, just like any other major automaker, has a love-hate relationship with its dealers. As insiders in the automotive world will confirm, auto dealer associations are now so powerful, so demanding that automakers themselves often wish that they too could follow Tesla’s lead and sell direct to customers.

For established brands like GM, severing ties with existing dealerships isn’t easy. There are legal complications, complicated clauses and messy divorces. For established brands, it’s often easier to continue the love-hate relationship with dealers in an eternal symbiotic dance of push and pull.

For GM to stand up for its dealer rights — and in turn its own rights — against Tesla is likely as much about curtailing Tesla’s huge grasp on the luxury plug-in market than it is about protecting a way of business which GM sometimes reluctantly adheres to. In equal measures.

Essentially, in testifying against Tesla, GM has chosen to make friends with its life-long sparring partner to fight what it perceives is a bigger enemy: Tesla Motors.

Here at Transport Evolved we’re familiar and comfortable with the ongoing battle between automakers for supremacy in the electric car world. And we’re comfortable with it when that battle takes place in the open arena of the electric car marketplace. But when one company uses its influence at a legislative level to directly impede a competitor, we’re as uncomfortable as we think you probably are right now.

But here’s the question: Is GM right to complain that Tesla is breaking the established status quo? Is it correct to legislate against a new business practice under the pretence of consumer, dealer and automaker protection? And is GM playing dirty just to give its overpriced Cadillac ELR a chance to catch up in the marketplace? Or perhaps GM is worried about Tesla’s plans for a third-generation, more affordable sedan which will compete directly with its own plug-in range?

Leave your thoughts in the Comments below.


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