The Michigan Legislature adjourned last year without addressing the antiquated law limiting new-car sales and now the risk increases that the birthplace of automotive innovation will be the last place on Earth embracing the future of new-car innovation and technology. That’s because Michigan is one of only a handful of jurisdictions on the entire planet where it is illegal for auto manufacturers to sell cars directly to consumers. Manufacturers are even barred from opening service centers in Michigan.
Everyone is aware that General Motors, Ford, Chrysler and other brands are sold through dealers, and that those dealers also have service centers to provide maintenance and repairs. Not everyone knows that state law grants auto dealers with a monopoly limiting consumer options.
Some car companies don’t want to follow that model. They want to sell directly to their customers and provide any needed service.
Tesla Motors is an innovative and dynamic American company producing some of the world’s most desired performance sedans and crossover SUVs. Those cars are also fully electric. Earlier this year Tesla began taking pre-orders for their new Model 3 all-electric car that will begin production next year. The Model 3 immediately became the most anticipated car in the world, with nearly 400,000 people placing $1,000 deposits.
Tesla sells and services their cars directly to their rapidly growing list of customers everywhere across the U.S. and around the world. That is except for Michigan and a handful of other states clinging to antiquated laws protecting auto dealers.
Teslas are sold in Ohio, Indiana, Illinois and Ontario — but not in Michigan.
Imagine if lawmakers passed a law requiring that all hamburgers sold in Michigan be sold only through franchised restaurants like McDonald’s. That seems crazy. Yet that’s precisely what we mandate for new autos.
Tesla has a production facility in Grand Rapids employing more than 100 people. They do business with more than 50 Michigan automotive suppliers. A Tesla supplier will be adding 380 jobs in the Flint area. Added up, Tesla spends more than $1 billion annually in Michigan. They’d like to spend more.
Tesla recently opened a non-sales Gallery in the Nordstrom’s store in Troy. The fact that the law allows them to display, but not sell, products further illustrates the absurdity of the Michigan statute.
Tesla would like to open stores across Michigan to sell and service their specialized all-electric cars. They’re ready to add scores of jobs and invest millions more in our state’s economy — if lawmakers will allow them to invest here.
House Bill 5312 was introduced last year, but the bill died with the new year. The bill would have allowed manufacturers like Tesla to sell directly to consumers provided they have no existing franchised dealers anywhere nearby. It would have been a win-win protecting the investments and jobs provided by existing auto dealers, and allowing Tesla to follow its own free market business model, not one mandated by state law.
Let’s hope the next Legislature doesn’t fail to act this term.
Rob Sisson is the president of ConsevAmerica.