Tesla blog calls Michigan bill "a raw deal"

Michael Martinez
The Detroit News
  • The bill stops Tesla from selling directly to retail customers other than through franchised dealers
  • Tesla CEO Elon Musk tweeted a link to the blog to his 1.1 million Twitter followers early Friday
  • Gov. Rick Snyder has until Oct. 21 to sign or veto the bill.

Electric car-maker Tesla Motors Inc. called a Michigan bill that would prevent automakers from selling vehicles directly to customers a "raw deal" in a blog post Thursday.

The bill — originally intended to address a separate issue before an 11th-hour amendment was made containing the direct deal language — is awaiting Gov. Rick Snyder's signature or veto. He has until Oct. 21 to make a decision.

It stops automakers from selling cars "directly to a retail customer other than through franchised dealers," with exceptions for nonprofits and government agencies. It does not specifically name Tesla, although the California-based electric-car maker is the only one looking to sell vehicles directly.

"This anti-competitive behavior mirrors similar tactics in New Jersey and Missouri, where dealers have resorted to backroom political maneuvers to shore up their monopolies," Tesla said in the blog. "The dark-of-night tactics highlight the dealers' concerns that their arguments don't stand up well to public scrutiny."

The blog post urged supporters to contact Snyder about the bill. Synder's deputy press secretary said Thursday Snyder's office was looking at the bill "very closely" before making a decision.

A guest test drives Tesla Motors' new version of its Model S sedan, the P85D, in Hawthorne, Calif. on Oct. 9,

Tesla CEO Elon Musk tweeted a link to the blog to his 1.1 million Twitter followers early Friday morning.

Tesla executives told The Detroit News Thursday that the bill, if signed, would stymie their efforts to open retail locations and service centers in the Great Lakes State.

The bill originally was introduced in May by State Rep. Aric Nesbitt, R-Lawton, to deal with an unrelated issue: standardizing how much new-car dealers charge customers for documentation fees detailing the car-buying process. The maximum Michigan dealers now can charge is 5 percent of a car's price, with a $200 cap. The new law would prevent automakers from telling dealers to charge less, and would require them to charge all customers the standardized rate — or nothing at all.

Nesbitt told The News he has nothing against Tesla. He said the language around Tesla was added by the Senate, but doesn't change current law.

"That was already there for decades," he said.

Nesbitt said someone could introduce a bill to change the dealer franchise law.

"If someone wants to debate the franchise laws in Michigan regulating dealers, that's what the legislative process is for," he said.

Michigan Automobile Dealers Association Executive Vice President Terry Burns, whose organization initiated the original bill, said the amendment is simply a "clarification" that the law applies to all manufacturers who "sell, service, display or advertise vehicles in the state."

"There's no attempt to back-door anything here," he said. "It's just a clarification to make sure that there's no ambiguity."

Burns said the amendment was added to avoid future litigation as to who the law applies to. Current law allows manufacturers' dealers to sell its vehicles; the amendment specifies they must be "franchised" dealers.

Tesla argues it would be allowed to sell directly in Michigan under the current law, since it doesn't already have franchised dealers in the state.

"The current law is ambiguous," said Todd Maron, Tesla's general consul. "That ambiguity is why the dealers, through these last-minute tactics, have gone to change the law."

Tesla has clashed with dealer groups in other states, including New Jersey, New York and Ohio, before reaching agreements.

"People have asked me is this an attempt to keep Tesla out. No," said Burns, adding he'd welcome the electric car manufacturer into the state's dealer system. "We would expect if Tesla wanted to operate in the state of Michigan that they would follow the laws."

Staff writers Melissa Burden and Michael Wayland contributed.


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