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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  • Robert Fahey

    New Jersey petition begun:nn

    • just someone old

      the petition should have said “we are for a free car market” where anybody can choose how it sells its products to its consumers and services them!

  • JohnCBriggs

    I think it is reasonable for GM to want Tesla to compete under the same rules. I think there are two paths forward.n1) Tesla gives up its business model.n2) GM embraces Telsa’s business model and pushes for changes, perhaps allowing GM to sell directly to consumers as long as they don’t undercut their own dealers (a model embraced by other industries, cough, Apple, cough.)nnWhile GM might like to try the first model, I think it is just too difficult so they went with the first.

    • disqus_93AE3RFoBu

      It’s not Tesla’s problem that GM has locked itself into a tired old business model. Nor should Tesla be forced to follow it just because GM can’t figure out how to get out of it. nnHere’s a thought: Instead of GM worrying about Tesla, how about they worry about key fobs and recalls and their customers? And perhaps GM might also put a little effort into repaying a government loan. After that, then they can worry about what Tesla is or isn’t doing.nnIn other words, they need to take care of their own business before they worry about another business.

  • Michael Thwaite

    Yuk!nnnThis is, I guess like Borders asking Amazon to stop selling books online. The sentiment is understandable but isn’t the better response to ask Ohio to allow GM to sell cars in the same way that Tesla does? Or, does GM not think that it can handle that sort of competition?nnnPeople often mistake Tesla for a traditional car company – it’s an understandable mistake, they do make vehicles but, it’s the difference between analog and digital, between old and new.nnnGiven that traditional car dealers aren’t able to successfully sell ‘digital’ cars, perhaps the better approach would be to separate them accordingly and apply different rules across the board. i.e. if you sell traditional gas cars, dealership model. If you sell only EVs, direct model.nnnWho here has ever bought a digital download at a brick-and-morter store and who still regularly buys CDs online?

    • vdiv

      I still buy books/CDs/SACDs/DVDs/BDs… mostly online :)nnnThe written testimony to the Ohio state senate shows how much GM and the other established manufacturers are under the influence of the dealerships — the tail wagging the dog. We’ve seen this movie before and in its current trajectory GM has at most another 8-10 years before it will be begging for a bailout.

  • PaulScott58

    I sell the LEAF for a Los Angeles Nissan dealer. I’m an EV advocate and will only sell the EV. From this insider POV, it’s clear to me that Elon is correct in his assessment of ICE dealers not willing to sell EVs correctly. While my dealership does an admirable job selling the LEAF, it’s pretty obvious that most dealers do not. I get calls and emails all the time from folks who bought/leased from other dealers and were treated poorly, or the sales staff tried to move them toward an ICE vehicle.nnnI don’t care why these rules were written, times change. Technology marches on, and this new technology is much, much better than the ICE age vehicles ever were. Selling direct from the manufacture is the correct way to sell these cars. If the other OEMs and their dealer network can’t compete, then they deserve to go out of business. That’s the way capitalism works. nnnEVs running on renewable energy (RE) solve many of the worlds most intractable problems. Rich men whining that they can’t compete do not constitute a reason for impeding the transition to EV/RE.

  • Kelly Olsen

    Most of these politicians that want to stop Tesla and have them operate under the arcane laws that are in place are Republicans who are usually screaming about and against government regulations and say they are in favor of a free and open market without undue government intervention and restrictions.nnThe reality is that they embrace restrictions and government regulations when it serves the purpose of protecting Wall Street, Corporate America and their campaign contributors.

  • just someone old

    With GM and dealers knowing about the possibility of deadly consequeces of a faulty ignitionswitch, and not repairing it, shows how they both care about their consumers!

    • beardedman

      GM’s so-called faulty ignition switch has no bearing on this discussion. However, since you brought it up, the story is grossly exaggerated and used as an excuse to cause trouble for GM. News agencies report outright lies such as “disables power steering and brakes, as well as airbags”. It’s true airbags are disabled when the switch is turned off, as it is in ALL cars. (Not just GM’s.) Steering and brakes are NOT disabled, only the power assist is gone. That means more effort is needed to steer and brake, which is clearly spelled out in every owners manual I have ever looked at. That is not a reason for liability. Driver distraction and inability to respond to known and documented emergency situations are where the liability rests. nnnVarious car makers have had this issue on and off for a very long time. Drivers attach ridiculous objects to their key chains and expect no consequences. In fact they demand they be allowed to do what they want regardless of the warnings not to attach heavy objects to the keychain, also discussed in owner manuals. Entitled drivers want to treat the car as if it were not a very dangerous piece of machinery capable of killing themselves and others, and want to sue someone when reality hits. Sort of belies the idea that we are intelligent beings.

      • just someone old

        But if GM has a remedy that just costs 1$ to protect themselves from being sued or risk the death of one of their customers. This shows how much they and their dealers care about them!nThey could just have included it when the car was being serviced!nEarning 1$ less on a 100$ or more servicecheckup would not have killed the dealer or GM