Tesla Contests Michigan’s Ban on Direct Sales

     GRAND RAPIDS, Mich. (CN) — Tesla Motors sued top Michigan officials in federal court in an effort to sell its electric cars directly to customers in the Wolverine State without using a traditional dealership network.
     The filing is in response to a denial of a dealership license earlier this month, when the automaker’s business model was deemed illegal under Michigan law by state officials.
     State law requires dealers to have contracts with auto manufacturers and not act as their own supplier.
     At the time of the denial, a Tesla spokesperson was quoted as saying the company “will continue to take steps to defend the rights of Michigan consumers.”
     Thursday’s lawsuit against Michigan Secretary of State Ruth Johnson, Attorney General Bill Schuette and Gov. Rick Snyder seems to take a swipe at American car companies recently shifting production of their vehicles to other countries.
     “While many other companies have moved manufacturing jobs overseas, Tesla designs, builds, and sells cars here in the United States, employing thousands in well-paying jobs,” according to the complaint, which was filed in Western Michigan federal court.
     The so-called “anti-Tesla” amendment to Michigan law, brought about by the Michigan Automobile Dealer Association, is a violation of Tesla’s constitutional right “to pursue legitimate business activities and subjects it to arbitrary and unreasonable regulation,” the complaint states.
     According to the lawsuit, the way the amendment was enacted was particularly suspect.
     “This new ban made its way through the Legislature covertly, with the Legislature bypassing the public notice-and-comment process to shield the bill from scrutiny or debate,” the complaint states. “Then, at the urging of the franchised dealers and General Motors (which considers Tesla a competitive threat to its own electric vehicle programs), the bill was signed into law by Gov. Rick Snyder.” (Parentheses in original.)
     Tesla’s business model of selling directly to the consumer via the Internet and acting as their own dealer was implemented successfully to varying degrees in several other states and countries.
     The only states that have refused Tesla’s model are Utah, Connecticut, Texas and Michigan. However, in Texas the company is allowed to promote “galleries” of cars without a dealership license where consumers can look at the products but cannot purchase or test drive them.
     Michigan legislators amended the law in 2014 when Tesla began to inquire about establishing galleries in the state.
     Tesla’s desire to sell their vehicles, like the four-door Model S and the new Model X SUV, in Michigan reached a fever pitch last May when the state demanded the electric automaker submit proof it was a franchised dealer, which it could not.
     A spokesperson for Snyder told the Detroit News the governor does not comment on pending litigation.

%d bloggers like this: