The Minnesota Automobile Dealers Association -- at least for now -- is ending its push for legislation to block Tesla Motors Inc. from operating dealerships in that state.
After making the decision on Monday, the association's leaders requested that a bill before the Minnesota Legislature be removed from a state House committee meeting agenda for Wednesday, said Scott Lambert, executive vice president of the dealers association.
"It seemed the only way to do it was to grant Tesla an exemption to the law, and we're not willing to do that," Lambert told Automotive News today.
The bill would have rewritten 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.
Tesla strongly objected to the proposed legislation, sending executives to testify at committee hearings and lobbying legislators. The electric vehicle maker proposed an amendment to the bill that would allow it to open stores in the state.
A state Senate committee voted against the legislation last week.
The dealers association isn't permanently dropping its fight. Reintroducing the legislation for the 2014 session is a strong possibility, Lambert said.
"We just have more work to do with the legislators and make sure they understand the benefit of the franchise system," he said. "We're going to do what we do and take the time and do it right."
The dealers association was unaware of Tesla's interest in the state when it put together the legislation, Lambert said.
When the legislation was introduced in February, 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 planned to open during the first half of this year. The Mall of America store would open later, probably 2014.
Tesla is happy to be able to move forward in Minnesota, said Diarmuid O'Connell, vice president of development.
"I don't chalk up wins and losses," O'Connell said. "It sounds trite, but it's true: I'm really glad we can enter the Minnesota market with a product that I think is very well suited to them."
He said Tesla would now proceed with licensing activity for the Edina service center and will re-engage on lease negotiations for the Mall of America spot. Under the state's current law, Tesla has an "unambiguous" path to operate, he said.
Lambert said he think it's unclear whether Tesla can get a license under Minnesota's current law. The dealers association's legal experts are studying that.