Why GM Wants Tesla Banned From Indiana

Source: General Motors

How does General Motors compete with Tesla? Aside from the ill-advised initial pricing on the Cadillac ELR, GM really doesn’t. Yet that will change in the coming years when Tesla’s Model 3 arrives and will attract consumers interested in the Chevy Bolt EV, which is due out this year. In a nutshell, that future threat is behind GM’s lobbying effort to end the electric car maker’s right to sell vehicles directly to consumers in Indiana.

The dispute, which evolved into a full-blown feud between the two automakers, took flight on January 27 when representative Kevin Mahan introduced a bill that would effectively end Tesla’s license to sell within the state unless it launched a dealership network. GM publicly acknowledged its “input” in the bill, Bloomberg reported, but said Mahan’s language was his own in the amendment that would ban Tesla.

Of course,┬áthis phrasing sounds like “I told him what to say but he used his own words,” and Tesla’s response was swift. Bloomberg quoted a representative of the Fremont-based EV maker calling the move “a protectionist effort” on GM’s part, while Indiana state rep. Curt Nisly chose sharper language, referring to the law as the “Kill Tesla Bill.”

As far as timing goes, the bill appears to have the Model 3 in its sights, as it sets a timeline of 30 months, after which an automaker’s direct sales license would expire. By mid-to-late 2018, Tesla’s first affordable sedan is expected to be in wide circulation, and the automaker’s sales volumes to a point where they could very much eat into GM market share.

After a February 25 hearing, Tesla’s gravest concerns were put on hold until the summer.

Source: Tesla

Indiana’s Committee on Commerce and Technology tabled a decision on the bill until the summer study, which will give both sides another opportunity to state their case and bring in outside perspectives. Tesla faced long odds if the bill went to a vote, as the previous count was 92-3 in favor of it passing, AutoBlog reported.

GM has spoken about the threat of disruption from an automaker like Tesla, but as far as its core business is concerned, the effects have been minimal through the start of 2016. Yet the Detroit-based giant showed how serious it takes the potential for mass-market electric cars in the development of its Bolt EV. Following the initial surprise of the Detroit Auto Show debut, Chevy continued pushing the envelope by saying it would debut by late 2016.

In fact, GM did not have the technological capabilities to pull off such a product, and its partnership with LG in constructing the drivetrain signifies how much it wanted to beat Tesla to market. That goal will soon be realized, and Tesla may not have the Model 3 widely available for another two years. GM looks ready to reserve as many customers as possible for its affordable EV, and it will lobby state-by-state to box out its prime competitor.

Follow Eric on Twitter @EricSchaalNY