Tesla Motors' plan to sell cars in Minnesota is in jeopardy because of legislation urged by the Minnesota Automobile Dealers Association.
Tesla is trying to amend the proposed legislation that would rewrite Minnesota's franchise law to make it clear that a vehicle manufacturer cannot operate a dealership.
Under the state's current law, a manufacturer is prohibited from competing with a same-brand franchised dealer.
When the legislation was introduced last month, Tesla was negotiating on locations for a store at the Mall of America in Bloomington, Minn., and for a service center in Edina, Minn. The service center is to open during the first half of this year. The store would open later, probably in 2014, a Tesla spokeswoman said.
In seeking the changes to the legislation, "we are merely trying to preserve our ability to operate," Diarmuid O'Connell, Tesla's vice president of business development, told Automotive News.
Scott Lambert, executive vice president of the dealers association, said the legislation is not aimed at blocking Tesla. It was prompted by members who were concerned about a gap in the franchise law's factory store prohibition.
Lambert said he was unaware that Tesla was planning locations in Minnesota until the vehicle maker contacted him less than two weeks ago. Nonetheless, the association opposes amendments that would allow Tesla's operation.
MADA representatives and O'Connell have testified at recent Minnesota House and Senate hearings on the bills.
Tesla's amendment hasn't been added to the legislation, which must move through more committees before reaching the full Minnesota House and Senate for votes.
The House and Senate sponsors of the bills have urged Tesla and the dealer group to try to work out a compromise.
Lambert said he's not "slamming the door on that" but that it will be difficult to craft a middle ground.
"We're not happy about granting them an exemption," Lambert said. "We've got dealers who have made big investments in their dealerships. A factory-owned store, it's a whole different model, and it's not fair."