2016 Bills

HB 384: Legalizing Direct Sales for Tesla, Vanderhall, and Other Manufacturers

This bill was referred by a House committee to interim study.

Libertas Institute supports this bill.

Last year, Representative Kim Coleman sponsored legislation designed to legalize the direct sales of vehicles from manufacturer to consumer. The so-called “Tesla” bill failed in the House on a 32-41 vote, despite Rep. Coleman reading to her colleagues the provision of Utah’s Constitution that states, “a free market system shall govern trade and commerce in this state.”

In the mean time, we learned that a Utah-based vehicle manufacturer, Vanderhall Motorworks, has been legally prohibited from selling their cars to Utahns.

House Bill 384 is Rep. Coleman’s second attempt at fighting this protectionism for auto dealerships. The bill exempts online and small vehicle manufacturers/dealers from the existing (and onerous) regulations on dealerships—regulations the dealerships have fought to create and maintain, in an effort to shield themselves from competition that cannot comply.

More specifically, “online manufacturer dealers” (companies that both produce and directly sell vehicles) are exempted if they are not the franchisor of a franchise that sells the same vehicles in the state. In other words, existing manufacturers would not be able to directly sell their vehicles in Utah; Tesla, Apple, or Google would.

A “small manufacturer dealer” may also qualify, and thus directly sell their vehicles to consumers, if they sell fewer than 300 vehicles per year, but only vehicles that are manufactured by that company.

Licensure, fees, and other regulations would still be required of both “manufacturer dealer” business models, but HB384 would explicitly legalize their sales activity within Utah.

Car dealerships have been lobbying extensively (and successfully) against this legislation. While the law should be substantially different than what it would be under this bill—as the Constitution states, a free market must be established—this is a small first step in the right direction that enfranchises companies that should not be legally barred from providing their products directly to Utah consumers.