Michigan to Join States That Ban Tesla Sales?

Cars and Drivers

Published: October 17, 2014 11:50 am

Last Updated: April 28, 2020 1:39 am

Legislation banning Tesla Motors Inc. (NASDAQ: TSLA) from selling its cars to consumers in Michigan has been approved by Michigan legislators and now awaits only a signature from Governor Rick Snyder before becoming state law. On its corporate blog, Tesla is urging consumers to contact Governor Snyder “and urge him to veto this legislation.”

Tesla claims that a last-minute change to the original bill (Michigan HB5606) that did not allow most legislators or the public from knowing what was happening or debating the change effectively locks the company out of the state. The change is nearly invisible.

Under current law a manufacturer may not:

Sell any new motor vehicle directly to a retail customer other than through its franchised dealers, unless the retail customer is a nonprofit organization or a federal, state, or local government or agency.

The amended version currently awaiting the governor’s signature says a manufacturer may not:

Sell any new motor vehicle directly to a retail customer other than through franchised dealers, unless the retail customer is a nonprofit organization or a federal, state, or local government or agency.

Spot the difference? Current law provides that a manufacturer may sell through “its” own franchised dealers. The amended law strikes the word “its,” which Tesla interprets to mean that only a currently franchised dealer may sell cars to retail customers. In other words, even if Tesla wanted to establish franchised dealers to sell its cars in Michigan, it cannot do so. The company must sell its cars through an existing dealer.

The amended law would also prohibit Tesla from operating what the company calls a gallery in Michigan. Tesla galleries show off the cars and provide information about them, but do not conduct sales.

If Governor Snyder signs the bill, Michigan will join four other states that currently ban Tesla from selling cars directly to consumers: New Jersey, Maryland, Texas and Arizona.

Tesla’s stock traded up about 2.5% Friday morning, at $232.00 in a 52-week range of $116.10 to $291.42.

ALSO READ: Is Tesla a Car or an iPad?

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