The New Nebraska Car and Truck Dealers Association proposed amending the state law to Sen. Carolyn Posen of Lincoln, who introduced a bill last month that would add less than 15 words to the state’s auto industry regulation law.
“The bill started out very simple,” said Louie Todd, the lobbyist for the association who brought the loophole to Posen’s attention. “Just update the definition to make sure that if you’re making vehicles, you’re a manufacturer — as simplistic as that may sound.”
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“The standard that the bills gave me was: ‘Let’s put forward good policy that is non-controversial and not political,’” Posen said.
“Nebraska law currently allows Tesla to operate a service center to provide service including warranty repairs within the state, rather than requiring technicians or customers to travel across state lines,” Mary Vagalis, a lobbyist for the company, told the committee at a hearing on January 23. .
“Under this authority, Tesla has opened a service center in Lincoln,” she added.
This was news to almost everyone, including Posen, who learned about Tesla’s new service center — which operates in the former Sears Auto store at Gateway Mall, and is in a legal gray area — in the days before the hearing.
There was no grand opening event, no news alerts. A redevelopment plan for the former Sears space was not submitted to the city’s Urban Design Commission until early January. A staff report noted that the developers planned to transform the garage into a “US multinational facility to service cutting-edge green electric vehicles.”
But store service manager Chad Hart told the committee that Tesla opened a store in Lincoln on Dec. 18 — or at least, when Tesla officially took over the building from the owners.
“Once they indicated they had this service center, we weren’t interested in closing it,” said Todd, a lobbyist for car and truck dealers. “We basically, in this short (60-day legislative) session, just wanted to do what we could to fix that definition. Because otherwise, any manufacturer that doesn’t have franchise dealers can basically say, ‘We’re not a manufacturer company.’ “This makes many laws unenforceable.”
As written, the bill would redefine automakers to include automakers that sell their products directly to consumers, eliminating the definition’s prior reliance on the franchise model — which was at the heart of the Delaware case that prompted the change.
Designating Tesla and other direct-to-consumer car sellers as manufacturers in state law would prevent them from operating service centers because of provisions of the Automotive Industry Regulatory Act that are intended to protect traditional car dealers from having to compete directly with automakers.
In fact, Bosnian’s bill would have prevented Tesla from operating the service center it opened in Nebraska, which was not its intention, she said.
Before holding a hearing on her bill in January, she worked with Tesla lobbyists and the New Car and Truck Dealers Association to come up with an amendment to the bill to provide an exception for existing electric vehicle service centers.
But committee members were skeptical of such a specific deduction — and of the implication that a simple clarification of the state law could have such dire consequences for Tesla.
“If (the bill) is primarily to improve the language in the statute, then I guess my question is… how did Tesla build a service center under existing law?” Omaha Sen. McKayla Kavanaugh asked at the January hearing.
Vagalis, the Tesla lobbyist, told the committee that two small changes made by the Bosnian bill — adding a comma and the word “includes” — would put Tesla under the definition from which the company believes it was previously excluded.
Kavanaugh, who remains skeptical, pointed to her years of service on the Transportation and Communications Committee and Tesla’s previous attempts to repeal parts of the Motor Vehicle Industry Regulatory Act “so they don’t have to operate in a vending model.”
“So Tesla built a service center, but now you want it to not be considered a dealership or a franchise?” Kavanaugh said. “But they are productive.”
Vagalis emphasized that Tesla does not believe it is considered a manufacturer under current law, which she said the company re-examined in the wake of the Delaware case.
In the weeks following the hearing, Posne and industry lobbyists from both sides worked together to craft a compromise that would specifically allow automakers to offer warranty and repair services to their customers — as long as they do not open sales floors or manufacturing plants in Nebraska, Posne said.
Will he strike the right balance to appease traditional auto dealers, Tesla, and the committee that must bring him to the legislature floor?
“That’s the goal,” Posen said last week, pounding on the wooden table in front of her. “I’ve talked to all the senators on the committee, answered their questions about that, and I think everyone feels as though now we’re in a place where that’s the intent and the goal and what Has been accomplished.
The committee has not yet advanced the bill — a measure that Posen, who serves on the committee, said she would not support unless the amendment for protective service centers is adopted.
PHOTOS: The Nebraska Legislature gavel on the first day of the 2024 session
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