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Officials from Tesla Motors will be on-hand Thursday to ask the Utah Legislature to kill what has become known as "the Tesla bill," arguing that the measure actually creates more problems for the company than it solves.
Rep. Kim Coleman, R-West Jordan, worked for over a year trying to broker a deal between Tesla, representatives of Utah's auto dealers and the nation's big car manufacturers. She thought she had pulled the sides together until last week when she released her bill.
Now Tesla says it imposes unrealistic restrictions on the carmaker's operations and the company would rather take its chances with a case pending in the Utah Supreme Court than see Coleman's HB384 pass.
"We don't want to be invited into the state and then be told we need to have one hand tied behind our back in serving customers," Todd Maron, Tesla Motors' corporate counsel, told The Salt Lake Tribune in an interview Tuesday. "The next best solution is to allow us to have our day in court."
For her part, Coleman has expressed frustration that the proverbial wheels have come off and blames Tesla for changing its demands.
She plans to push ahead with her bill, which she said helps other auto manufacturers with business models similar to Tesla's, as well as small Utah manufacturers like Vanderhall Motor Works, which builds high-end three-wheeled motorcycles, and Kirkham Motorsports, which builds custom roadsters.
The issue stems from the state's refusal to issue a license to Tesla to open its showroom in South Salt Lake, citing provisions in law that require manufacturers to work through franchised dealerships.
Tesla wants to cut out the middle-man dealers and for the last year has been in a tug-o-war with the Utah New Car Dealers Association and manufacturers that are operating under the traditional model.
Coleman's proposed bill would have created a new kind of license for direct vehicle sales, but Maron said it would have also come with unacceptable limitations.
For example, he said, the law would not have allowed Tesla to have any vehicle inventory anywhere in the state.
"That works now because right now we're a pretty small manufacturer and we custom-build all our cars in our factory in California," Maron said. "But you can imagine that one day, like any company out there, we might want to tweak or change how we conduct business."
Maron said the bill also prevents buyers from signing any financing documents at the Tesla showroom and banks don't accept electronic signatures.
"So therefore you cannot finance a car. You have to pay cash or not at all, which is terrible for the consumers," Maron said. "That shows you what the dealers' actual motivation is."
Coleman said legislative attorneys have told her that is not the case the financing is a separate transaction and not restricted by current law. "The bill doesn't speak to that so it doesn't prohibit it," she said.
Craig Bickmore, executive director of the New Car Dealers Association of Utah, said his group supports the current version of Coleman's legislation.
HB384 is scheduled to be heard Thursday afternoon in the House Business and Labor Committee, where Tesla will try to kill the legislation so it can pursue its lawsuit. If the bill passes, it could undermine Tesla's case before the Supreme Court.
"Our adversaries would certainly take the position that our lawsuit has failed once this legislation is passed," Maron said.