The trade group that represents most of the big auto makers in the U.S. is for the first time weighing in on the running dispute between Tesla Motors Inc. and franchised auto dealers, urging Pennsylvania lawmakers not to give the Silicon Valley car maker a way to avoid state franchise laws that control retailing operations.

The Alliance of Automobile Manufacturers is opposing legislation, which was introduced Monday, that would allow Tesla to operate its direct-sales model—but disallow other manufacturers from bypassing franchised...