Mississippi Senate Passes Bill Banning Direct Sale of Electric Vehicles

A Tesla Model Y Long Range is displayed at the Tesla Gallery in Troy, Mich., on Feb. 24, 2021 Carlos Osorio/AP Photo

The Mississippi Senate on Mar. 2 voted to approve a bill clarifying the state’s franchise laws as they pertain to vehicles in a move that could restrict the electric vehicle (EV) industry from expanding.

The legislation, House Bill 401 (pdf), was introduced by Republican Rep. Trey Lamar of Senatobia and passed by a vote of 38–14.

It now heads to the desk of Republican Gov. Tate Reeves, who has not indicated whether or not he will sign it.

Under the legislation, EV manufacturers will have to sell their vehicles through a franchise dealership as opposed to their manufacturer-owned dealer, putting them in compliance with the same laws traditional carmakers follow.

Traditionally, car dealerships in the state have been locally owned and partnered with large manufacturers such as Ford, Honda, Nissan, and others.

According to the bill, “No motor vehicle manufacturer, factory branch, distributor, distributor branch or subsidiary thereof is, directly through any parent, subsidiary or affiliated entity, whether or not such motor vehicle manufacturer, factory branch, distributor, distributor branch or subsidiary thereof has entered into a franchise with any person or entity in this state, eligible to: (a) own any ownership interest in, operate or control any motor vehicle dealer or dealership in this state for the same type or classification of motor vehicle that it manufactures or distributes; (b) apply for a motor vehicle dealers license; or (c) be licensed as a new motor vehicle dealer in this state.”

EV Makers ‘Have to Follow Same Laws’

If signed, the bill will be effective as of July 1, 2023.

Tesla sells vehicles in person at a single location in Brandon, Mississippi, that is classified as a store, not a dealership. The distinction allows the company to operate outside state laws governing franchise businesses.

While the new bill does not restrict the direct sale of electric cars, which can still be purchased via online stores, it would prevent Tesla or any other electric car company from opening a new physical location to sell cars unless they enter a franchise agreement, in line with traditional carmakers.

Supporters of the bill argue it is needed to protect local franchise dealership locations and to ensure that all car manufacturers, regardless of their business model, play by the same rules.

“We’re saying if you choose to have a brick-and-mortar dealership, you have to follow the same laws that everyone else has to follow,” Republican Sen. Daniel Sparks of Belmont said. “Please don’t tell me Tesla’s car doesn’t identify as a car.”

Bill Could Impact Investment in Mississippi

However, opponents fear the new bill could prevent EV manufacturers from bringing new technology and jobs to the state, and leave the state falling behind in the race to attract investment from such companies.

“We’re telling the electric vehicle [makers] to use a different sales model, that their sales model is not acceptable in Mississippi. How that hurts consumers is, number one, these electric vehicles, if you have to go to a middleman and go to a dealership, you can already count on a 5 percent increase in cost tacked on just for the middleman on that,” state senator Jeremy England (R-District 51) told local media.

“By shutting down their sales model to get these electric vehicles to the consumers here in Mississippi, I believe we’re sending the wrong message. I think we’re telling them we’re going to do things the old way here in Mississippi. Good luck in the other states. They’re going to start selling their vehicles there, and we’re going to miss out on it,” said England.

The Mississippi Senate’s passing of the bill comes amid the Biden administration’s push to ensure that half of all new vehicles sold in 2030 are electric or plug-in electric hybrids.

However, American EV start-ups have reportedly seen a decline in interest and demand amid increased production costs and supply-chain issues on top of soaring inflation. Tesla is one of multiple EV makers that has slashed prices this year in order to boost sales.

The Epoch Times has contacted Tesla for comment.

The Associated Press contributed to this report.