Michigan to Tesla: Sorry, No Stores For You. Next!
Tesla’s dream of establishing a sales footprint in America’s auto manufacturing heartland is dead, at least for now, after Michigan lawmakers slammed the door on its direct sales bid.
The electric automaker’s application for a dealership license was denied after state representatives claimed it violated a law specifically designed to keep companies like Tesla out, The Detroit News reports.
Not surprisingly, Tesla’s business model — which has prompted legislative backlash in various states — was its downfall.
“The license was denied because state law explicitly requires a dealer to have a bona fide contract with an auto manufacturer to sell its vehicles,” said Michigan Department of State Communications Director Gisgie Dávila Gendreau to The Detroit News. “Tesla has told the department it does not have one, and cannot comply with that requirement.”
Two years ago, Michigan passed a law banning the direct sales of vehicles. The law, a protectionist move benefiting the state’s auto manufacturers, was initiated by the Michigan Automobile Dealers Association.
Tesla fought against the new law, but with the makeup of its business at odds with state regulations, the chances of gaining a license was slim from the outset. It could appeal the ruling, but the company hasn’t said if it will.
A used car license application submitted by Tesla is still under review.
Another option for Tesla is generating the political will to reverse the state’s position, but that’s a pipe dream at this point. A bill introduced by State Rep. Aaron Miller (R-Sturgis) seeks to overturn the ban, but has made little headway. It expires at the end of the year.
Despite the sales setback, the news out of Michigan isn’t all bad for the automaker. Earlier this year, the Michigan Department of Treasury boosted its ownership of Tesla stock to $72 million.
[Image: Tesla Motors]
Cdotson on Sep 20, 2016
Tesla has been trying to open a store in Richmond, VA since at least March of 2016. They already have a store outside of Arlington, which is in the Washington, D.C. mega-suburb hell known as Northern Virginia. The Virginia Auto Dealers Association filed a lawsuit against the DMV to prevent the Richmond Tesla store from being permitted precisely because independent dealers (who comprise the VADA) are cut out of the picture. Their hearing ended with a recommendation against Tesla, but the DMV has until November to issue a final ruling. It will be interesting how this turn out as we have a Shillary Democrat governor but Republican-dominated legislature.
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