Recently, Mississippi Governor Tate Reeves signed a bill into law which places restrictions on electric vehicle manufacturers in the state. On this episode of Inside Automotive, Marty Milstead, the President of the Mississippi Automobile Dealers Association and Mississippi State Senator Daniel Sparks join host Jim Fitzpatrick to discuss House Bill 401, and what it means for dealers.
Milstead explains that Mississippi has has a franchise law which has effectively protected dealerships from OEM competition for years. Under the legislation, retailers were require to obtain an agreement from a manufacturer in order to obtain their dealer’s license. In 2019, Tesla attempted to enter the state by filing for both a manufacturer’s and a dealer’s license. Although their efforts were initially blocked by Mississippi’s Motor Vehicle Commission, the automaker circumvented the law by creating an LLC in the state, and signing a trade agreement between itself and this subsidiary.
When it goes into effect in July, Bill 401 will tighten regulations to prevent any car brands from operating their own store in the state. Sparks was responsible for introducing the legislation to the Mississippi senate. “Ultimately, my position has been one set of rules for everyone: it doesn’t matter what your propulsion system is,” he remarks. This comment refers to the multitude of electric vehicle brands which have sought to evade franchise laws at the expense of dealers in multiple states, gaining an upper hand over their legacy automaker competitors.
While some of his colleagues questioned whether the restrictions in the new law would restrict free market competition in Mississippi, the senator notes that electric vehicle brands, including Tesla, were heavily subsidized by both state and federal governments. Furthermore, while Bill 401 does prevent OEMs from setting up their own dealerships, Spark notes that it is not a direct sales ban. “They can continue to sell their cars directly through online sources,” he notes, adding, “If you want a brick and mortar store, just follow the laws on the books.” The legislation also allows automakers to set up their own service shops at will.
