Michigan Gov. Rick Snyder has signed into law a bill that reinforces laws against the direct-sales model that Tesla Motors employs, effectively barring the automaker from selling its wares in the state.
According to the letter sent to legislators from Snyder's office announcing the signing of Public Act 354:
This bill does not, as some have claimed, prevent auto manufacturers from selling automobiles directly to consumers at realign in Michigan. That is because this is already prohibited under Michigan law. The current law states that a manufacturer shall not "[s]ell new motor vehicle directly to a retail customer other than through its franchised dealers…"
The current language states plainly that a manufacturer can only sell new vehicles to consumers through its own network of franchised dealers. House Bill 5606 detest the word "its" from this sentence. This change would appear merely to allow manufacturers who do not have their own franchised dealers to sell through another manufactuerer's [sic] network of franchised dealers. But in any event they will be required, just as they are now, to sell through a franchised dealer, and not directly to consumers. House Bill 5606 does nothing to change this fact. At most, it clarifies the existing requirement in Michigan law.
Reports indicate the change in the text was spearheaded by state dealer associations. And earlier today, GM came out in favor of the legislation, saying that the bill "will help ensure that all automotive manufacturers follow the same rules to operate in the State of Michigan."
The dealer's case – and GM's – is that dealers provide a valuable service to consumers and by continuing to employ the traditional dealership model, they're protecting car owners.
Tesla issued this response to GM coming out in favor of the law:
What's good for GM's customers is not necessarily good for Tesla's customers. What's good for gasoline cars is not necessarily good for electric cars. Tesla is selling a new product with a new technology. The evidence is overwhelming that a traditional dealer-based approach does not work for electric cars. Moreover, GM distorts the purpose of the franchise laws (including in Michigan), which are in place not to cement a monopoly for franchised dealers but rather to prevent companies with existing franchises from unfairly competing against them. Tesla has never used franchised dealers, so these concerns are simply irrelevant. It's only through the last-minute amendment to HB 5606 that Michigan law would be distorted into something entirely different.
Although this new law simply plugs a hole in the existing legislation to remove any ambiguity, the dealer lobby and GM's support plays differently.
"Competition is always healthy," GM spokeswoman Heather Rosenker tells Jalopnik. "But it needs to be on a level playing field."
The Governor issued a video response (above). The full text of his letter is below.