Anti-Tesla Bill Has Cleared Michigan’s State Legislative Chambers

The legislation that would prevent Tesla Motors Inc. from directly selling its electric vehicles in Michigan has cleared the state’s legislative chambers and is now awaiting the signature of Republican Governor Rick Snyder.

The bill, H.B. 5606, was originally introduced in May and had nothing to do with Tesla at that time. The bill was written in an attempt to prevent franchised dealers from charging random fees to customers, but when it arrived in the Senate on October 1, text was added that would prevent companies, such as Tesla, from selling directly to consumers in Michigan.

The deadline to sign the bill is October 21, and Dave Murray, Snyder’s deputy press secretary, said that, “Right now, the governor’s office is evaluating the bill, and there has not been a decision to sign it or not sign it as of yet.”

Concerns have been raised over the lack of debate or public attention once the bill’s language was changed to include the new anti-Tesla component, and some experts claim that the lawmakers weren’t aware of the full details of the bill. Spokespeople for the House and Senate Democrats have stated that their caucuses were unaware of the effect that the added language would have on Tesla, however, neither the House and Senate Republicans or Aric Nesbitt, the bill sponsor, have commented on this aspect yet.

Rep. Tom McMillin was the only member in the House or Senate who voted against the bill once the anti-Tesla language was added, but he did so due to the original language in the bill, stating that he is against the idea of the government being involved in determining contract language between private companies.

The National Automobile Dealers Association, which represents approximately 16,000 new-car dealers, is in favor of the franchised-dealer network. “States are fully within their rights to protect consumers by choosing the way cars are sold and serviced,” said a spokesperson, Charles Cyrill. “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.” While the bill provides exceptions for nonprofit organizations and government agencies, in essence it prohibits automakers from selling a vehicle directly to a retail customer other than through franchised dealers.

Tesla has been facing opposition from dealers across the country who contend that the automaker’s plans to sell directly to consumers violates state franchise laws. This has been a continuing problem for Tesla. For example, last month, the company was forced to stop an Iowa test-drive event because it violated state law requiring a license for any auto retailing activity.

Tesla’s vice president of regulatory affairs, James Chen, has been working diligently to try to stop the progress of the legislation. “We are playing a game of Whack-A-Mole in every state,” he told The Wall Street Journal.

Automotive dealers across the country will be watching closely as this unfolds, while debating whether or not Snyder will choose to sign off on this new legislation.