Tesla owners and those who oppose changing the way Nebraskans buy cars aired their differences Tuesday in front of the Transportation and Telecommunications Committee.
A bill (LB830) introduced by Omaha Sen. Tony Vargas would allow an auto manufacturer that doesn't have, or has never had, a franchise in Nebraska to sell its vehicles directly to consumers. Tesla, which designs and manufactures models of electric cars and SUVs, was the focus of the hearing.
Tesla sells its vehicles in company-owned showrooms and online rather than a conventional dealership franchise strategy. With the bill, Tesla and companies like it would be held to the same rules and regulations as dealerships, but would be able to sell directly, Vargas said.
Consumers want the choice, he said.
"We have new markets emerging all the time," he said.
Amazon and Apple sell directly to consumers. The rules change, he said.
Why is Nebraska trying to make new auto manufacturers like Tesla fit an old framework, "instead of figuring out a mechanism to help them be able to operate and be effective and grow their business?" Vargas said.
Daniel Witt, Tesla senior manager of business development and policy, told the committee the bill, besides being designed to help Tesla, would apply to startup companies like Waymo, Lucid Motors and Zoox. But it is not a threat to dealers in Nebraska.
"Tesla is not here today to overturn the franchise system. Where we have advocated for these types of changes, we have similarly not been in the business of trying to shut down local businesses," Witt said.
"We like to think of ourselves as a small fish in a very big pond."
Tesla has about 170 owners in Nebraska, he said, and is expected to grow four to five times bigger in the next year or more. The coming Model 3 is where the company expects to see the most growth.
Sen. Curt Friesen of Henderson asked if it would help sell more vehicles to have a storefront in Omaha.
"I can say with absolute assurance that yes, it would help us sell more vehicles," Witt said.
Tesla owner Nick Bock of Lincoln said it was frustrating that he cannot have his car serviced locally, but must drive to Kansas City. Other owners at the hearing had purchased their cars in Denver and California.
But Loy Todd, president of the Nebraska New Car and Truck Dealers Association, said the most efficient way to sell cars here is the franchise system. About 107 dealerships employ about 8,000 people in Nebraska.
The fear of such a law is that many motor vehicle manufacturers would also like to sell directly to customers, he said, in competition with their dealers. And they would find a way around the law to do that.
"My dealers cannot compete with their manufacturers," he said. "They will be eliminated."
But Vargas told the committee Nebraska should be doing everything it can within the law to encourage American innovation and entrepreneurship, not discourage it.
Lincoln Sen. Mike Hilgers agreed that Tesla is an innovative company and its technology is amazing, he said.
"But I don't think that is the same thing as saying that this business model is innovative," he said. "The idea of cutting out the middle man and selling direct to the customer and keeping all that profit to oneself is sort of a business model as old as there's been capitalism."
Vargas said the bill would not upend the market or destroy it.
"In fact, all we're seeing is a new market, a new product for consumers and more choice," he said.