Will Michigan Ban Tesla From Selling Cars There? – Forbes
Michigan has tried hard to change its image from that of a bastion for the Detroit auto companies. But some state lawmakers are trying to convince Gov. Rick Snyder to inadvertently give the car companies protection against billionaire Elon Musk and Tesla Motors Tesla Motors.
The governor has until Tuesday to decide whether to sign a bill that includes a ban on auto companies from selling directly to consumers. While it doesn’t mention Tesla by name, the electric car company is the only major player that does so.
According to the Detroit News, the provision was added to a measure introduced last May that standardizes the fees car dealers charge customers for the car-buying documentation process. The amendment barring direct sales was placed on the bill on Oct. 2, just before it was passed by the state legislature.
The amendment, which got little attention at the time it was introduced, apparently caught Tesla unawares. Diarmuid O’Connell, Tesla’s vice president of business development, told the paper, “This amendment was put in last-minute, under the cover of darkness, probably with a calculation that it would be much more difficult (to pass) in a public debate in the light of day. There is a basic issue of fairness here; we didn’t have an opportunity to come and debate this bill.”
Tesla doesn’t have a sales outlet in Michigan. The closest dealership is in Columbus, Ohio, about a four-hour drive from Ann Arbor. The company has 50 registered owners in Michigan, meaning that they purchased their vehicles either directly from the company or in a state with a Tesla outlet, such as Illinois.
Snyder, a Republican who is running for re-election, hadn’t decided as of Thursday whether he would sign or veto the legislation.
It’s puzzling why Tesla opponents would try such a stealth move, when Tesla’s presence in Michigan has never been the subject of any controversy. The state’s dealer group maintains the amendment was only meant to clarify the status of car dealers in the state. Current law says only “dealers” are allowed to sell cars in Michigan; the amendment turns it into “franchised dealers.”
Of course, one of Tesla’s main characteristics is that it does not rely on dealers to sell its cars, but markets them directly to consumers. So, while Tesla might someday open a sales outlet in the state, it would surely keep control of the operation, rather than award it to a franchisee.
Detroit car companies, from what anyone can tell, are not behind the move. In fact, they seem intrigued by what Musk has been able to do in the luxury car market. Last year, GM’s former CEO Dan Akerson put together a team charged with studying Tesla. Of course, GM had a $1 billion electric car program of its own in the 1990s, which it killed.
GM and Ford have long been rumored as being interested in buying Tesla, if the company were ever to go up for sale. And, Tesla has partnered with a variety of automakers, including Toyota, which once operated a joint venture with GM in the Fremont, Calif., plant where Tesla assembles its automobiles.
Tesla has faced battles with dealers in other states, including New Jersey, Texas and North Carolina. However, it was able to add a new state to its dealership list earlier this year. Nevada lawmakers gave Tesla the right to sell cars there as part of the $1.25 billion deal that brought the state the Tesla gigafactory.
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