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Tesla disrupts proposed Nebraska bill meant to fix manufacturer loophole

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Tesla continues to earn its status as a disruptor in the automotive industry after it most recently sent legislators and lobbyists in Nebraska scrambling to fix a proposed bill that unintentionally threatened to shut down a service shop no one knew existed, according to a recent article in the Lincoln Journal Star

The recently proposed bill, LB891, is meant to fix a loophole in federal law that excludes Tesla and other direct sales businesses from being defined as manufacturers. However, the wording jeopardizes the future of a Lincoln Tesla shop. 

In a court ruling last year, the Delaware Supreme Court noted the Motor Vehicle Franchising Practices Act defined manufacturers as businesses that contracted with third-party dealers to sell their vehicles.

In Nebraska, Sen. Carolyn Bosn proposed LB891 to redefine the word “manufacture” in Nebraska state law to include any business that directly sells the vehicles after manufacturing or assembly. 

Bosn didn’t know that by defining Tesla as a manufacturer, her bill would also close a Tesla service center already operating in a “legal gray area,” according to the Lincoln Journal Star article. 

“There had been no grand opening event, nor news alerts,” the article says. “And the redevelopment plan for the former Sears space wasn’t presented to the city’s Urban Design Committee until early January.”

The shop’s service manager told the Lincoln Journal Star that Tesla took possession of the building on Dec. 18. 

Under the Motor Vehicle Industry Regulation Act, manufacturers cannot operate service centers, the article said. This keeps manufacturers from competing with their third-party dealerships. 

Bosn’s bill is facing criticism from the Tesla business and Tesla owners, the article said. 

Tesla advocates told legislators in a Jan. 23 hearing that without the service center, Tesla owners would have to travel across the state for services such as warranty repairs, the article said. 

A more recent article from the Lincoln Journal Star states, “Stakeholders on all sides have since worked together to draft an amendment to the bill that would allow Tesla and other startup car makers to service the cars they sell directly to consumers, clearing up the legal gray area under which Tesla opened its Lincoln service center.” 

The article does not detail what the amendment says. 


Photo courtesy of Baileystock/iStock

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