Tesla seeks a change to state law that would allow it to open its own stores and service centers in Wisconsin, but it could face pushback by some traditional auto dealers.
Bob Clapper, who owns and operates Fagan Automotive in Janesville, told The Gazette he believes some dealers would oppose a bill introduced Wednesday to exempt electric auto manufacturers from a longstanding state franchise law that bans manufacturer-direct auto sales and servicing.
When interviewed Wednesday morning, the bill had not been released, and Clapper had not yet seen it. But he said dealers are watching Tesla push similar legislation in other states, including Michigan, and he believes the electric car maker’s play in Wisconsin could face pushback from dealers, even if the law change applies only to makers of all-electric vehicles.
He said the law could circumvent what he considers healthy competition by dealers under a current law structure that he said ultimately benefits consumers.
“The purpose of the laws on the books, it’s well known. If you have multiple (local or regional) representatives—in this case, dealers—it produces competition. That’s good for the consumer. If it’s a factory-direct sale, you have one source, and there is no other source of competition,” Clapper said.
The rule change could cut licensed dealerships from the equation and offer “no advocate between the consumer and the manufacturer,” he said.
“The type of propulsion of the car, electric or not, has nothing to do with franchise law. Electric or not, the franchise laws are written for reasons. The law is there to protect all dealers, and ultimately, consumers,” he said.
Clapper said he’s aware the state’s main dealership lobby, the Wisconsin Automobile and Truck Dealers Association, wants a seat at the table to weigh in on the bill. He stopped short of saying the lobby sought to kill the bill.
Tesla, which turned out in Madison alongside lawmakers and Tesla owners to announce the bill Wednesday, said the bill amends an antiquated law that’s “outdated and anti-business.”
Wisconsin law prohibits automakers from operating or controlling a car dealership or service center. Rob Brooks, R-Saukville, who sponsored the bill along with Sen. Chris Kapenga, R-Delafield, said that by granting an exemption only for electric vehicle manufacturers—Tesla—it protects traditional dealerships from competition from gasoline-powered automakers selling directly to consumers.
“This is not a threat to traditional dealers,” Brooks said of the bill, which is being called “The Electric Vehicle Freedom Act.”
About 60 Tesla owners offered rides in their vehicles outside the Capitol on Wednesday as part of the push for the Republican-authored bill. The proposal’s sponsors said it only makes sense to have Wisconsin join 23 other states in allowing Tesla to open its own stores to sell and service its high-end electric vehicles.
There’s no reason Wisconsin’s roughly 500 Tesla owners should have to take their vehicles to Illinois to get their vehicles serviced, Brooks said.
A Tesla lobbyist on Wednesday said the company has not determined how many stores it might open should the law be changed, but each would be at least a $1 million investment and employ at least 25 people.
Typically, Tesla eschews the dealership model. Instead, it focuses on online sales and operates retail stores that are self-owned. Recently, the company has begun to set up the stores in high-traffic mall spaces.
The bill is pending sponsorship, and it would have to pass the state Legislature and get Gov. Scott Walker’s approval. The governor’s office was ambivalent about the bill Wednesday, and because legislative sessions end later this month, the bill probably wouldn’t get a look until the 2018 session.
“The governor has never stood in the way of innovation,” Brooks said. “I can’t see him standing in the way of this.”
Walker’s spokesman, Tom Evenson, was noncommittal, saying Walker would review the bill should it pass.
Clapper believes Wisconsin’s auto franchise laws offer consumers some of the most robust consumer protections in the nation. He cited a law he said is on the books only in Wisconsin requiring sellers of used vehicles to provide proof the vehicles have been inspected.
Clapper said he doesn’t question the quality of Tesla’s products, but the company should have to operate on an “even playing field” with other automakers and dealers statewide.
“There’s nothing to prevent Tesla from selling their product in Wisconsin. They just don’t want to do it under the current law system,” he said. “They’re welcome to come into the state under the current laws that are on the books.”
The Associated Press contributed to this report.