Tesla Facing More Dealership Hurdles, This Time in Michigan

A few months ago, GM Authority told you about a few states that had legislation introduced to prevent Tesla Motors from selling its cars within their respective borders. Now you can add Michigan to the list as legislation has cleared the state’s legislature and is waiting for the governor’s signature to become law.

“Many bills came over as the legislature finished the session, and the governor is doing due diligence by examining all of them,” said the deputy press secretary for Governor Rick Snyder.

The problem is that Teslas are sold through factory stores and not through a franchise like most other new-car dealerships. Dealers feel that this undermines how franchisees have sold vehicles for decades. If it becomes law, the bill will prohibit an automaker from selling a vehicle “directly to a retail customer other than through franchised dealers,” with exceptions for nonprofit organizations and government agencies.

According to an email received by Bloomberg from a spokesman from the National Automobile Dealers Association, “States are fully within their rights to protect consumers by choosing the way cars are sold and serviced. Fierce competition between local dealers in any given market drives down prices both in and across brands. While if a factory owned all of its stores, it could set prices and buyers would lose virtually all bargaining power.”

Tesla CEO Elon Musk has said the unique nature of the company’s vehicles means that they are best sold directly by the company. Tesla often has showrooms in rented spaces in malls or galleries, and customer place orders over the Internet.

Governor Snyder has until October 21 to either sign or veto the bill.

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