By on September 19, 2016

tesla-model-s-

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]

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41 Comments on “Michigan to Tesla: Sorry, No Stores For You. Next!...”


  • avatar
    Kenmore

    OMG! Tesla is like seriously totally downtrending! I won’t even say the name anymore.

  • avatar
    readallover

    Thus handing Tesla one of its` greatest advantages – exclusivity.

  • avatar
    kit4

    What do you expect from a state run by greedy labor unions and Democrats who do their bidding?

    • 0 avatar
      Kenmore

      Rabid football fans.

    • 0 avatar
      Pch101

      Here’s a map of states where Tesla can operate stores. The states that allow Tesla stores are blue, the ones that do not are red.

      http://www.greencarreports.com/news/1095337_where-can-tesla-legally-sell-cars-directly-to-you-state-by-state-map

      That sure looks a lot like the 2012 electoral college map. You did a great job of blowing it with your last post.

      Oh, and there is the minor detail that the Michigan House and Senate are both majority Republican, and the governor is Republican. But hey, facts aren’t important when they are inconvenient, right?

    • 0 avatar
      dal20402

      Bzzzt. Try again. It’s the car dealers and their Republican friends who are behind this.

    • 0 avatar
      stevelovescars

      You must be sucking fumes from your rolling coal trucks’s tailpipe if you believe this is anything more than pure quid pro quo between Michigan’s Republican-led assembly, the Governor, and the state’s car dealers.

      Oh, let’s not forget that one of the largest dealer group owners in the state, DeVos, is also the largest Republican donor in Michigan. They have 41 dealers (mostly in Michigan and a handful in Chicago, under the Fox Motors name).

      The DeVos family have reportedly donated over $52 Million to conservative politics over the years. https://rewire.news/article/2016/03/21/devos-family-promoting-christian-orthodoxy-political-donations/

      Not to say that they are the only dealer to put pressure on the state legislature, but I’m sure they have a hotline to the Governor’s office.

    • 0 avatar
      Adam Tonge

      lol @ the state being run by labor unions. The cities that had any significant labor presence are dead, dying, or being resuscitated. As Metro Detroit’s population drops below 50% of total state population the state gets more and more red. Democrats seem to forget to vote in off cycle elections though.

  • avatar
    CoreyDL

    …Wake up early and stroll past quaint cafes, as your children recount their favorite campfire story from the night before…

    …Journey to Ann Arbor, Saginaw, and Grand Rapids, and see the beauty that is Pure Michigan (TM)… unspoiled by electric car stores.

  • avatar
    Rochester

    I can’t believe the crappy American Domestic Auto Industry did this to Preston Tucker… er, I mean, Tesla. I’m sitting here in my Cadillac ELR, weeping for lost innovation, and hoping I don’t get tears on this chrome-plated plastic trim. (Because like everything Cadillac, it costs 4x more than it’s worth.)

    Oh the horror!

    • 0 avatar
      Kenmore

      Isn’t T***a part of the American Domestic Auto Industry? For now?

    • 0 avatar
      haroldingpatrick

      I happen to be visiting Michigan last week and saw my first ELR, but was surprised to not see any Teslas. I see at least one every day in upstate SC where I live, go figure.

      • 0 avatar
        Adam Tonge

        There are plenty on Oakland County, MI. I have two neighbors that own a Model S. Still, you won’t see as many because of the amount of people that work for the Big 3. There are more 2017 Lincoln Continentals in my neighborhood than all Teslas.

    • 0 avatar
      Paragon

      You got it, Rochester. In this day and age when we have all those furrin brands not only selling cars here but making them in OUR OWN COUNTRY! Oh, the horror! But in all seriousness, I am still as thoroughly disgusted with the American Domestic Auto Industry for what they did to the brilliant Preston Tucker as I was when I first learned about it many years ago. Not only do I like people who “think outside the box,” I think we all benefit from them. Why must people find new ways to exert control over others in order to benefit themselves, while intentionally hurting others? That’s an aspect of America I don’t feel good about. I guess that’s an aspect of protectionism.

  • avatar
    SCE to AUX

    I wonder what the Model 3 pre-order map looks like.

    If you pre-ordered one (or even ordered a Model S or X today online), how do you take delivery without a store in your area/state?

    • 0 avatar
      Scoutdude

      As noted below it seems as though Tesla picks up cars for service and takes them to Ohio. So I can see you going to the nearest location, signing your paper work and then if you live too far away, Tesla giving you the number of the flat bed tow truck company they use, having you order and pay for it and then they reimburse you for the tow.

      • 0 avatar
        SCE to AUX

        Eeww. Although I’m a Model 3 reservist, I’m cautious about Tesla’s ability to scale their operation effectively.

        You can’t be flatbedding 400k cars all over the country, not to mention building a service network that’s reasonably located.

        In my case, there is a Tesla store about 45 minutes from home – not great, but at least it’s not in another state.

  • avatar
    GS 455

    Since Elon Musk believes we’re living in a computer simulation he should just say: “there is no Michigan Government”. It worked for Neo.

  • avatar
    here4aSammich

    There are plenty of Tesla’s in Michigan. I tend to see them in 2 places. Either sucking up the free charging at Metro Airport or on the back of a flatbed headed south from Ann Arbor on US23. The service jobs and revenue all goes to Ohio as well.

    • 0 avatar
      stevelovescars

      Just because they can’t get a dealer license to SELL cars in Michigan, I don’t think that’s required to set up a service facility, right? Granted, the math on a building may not work without sales revenue, but compared to flatbedding cars 100+ miles it has to make more sense.

  • avatar
    CombiCoupe99

    Organized crime – plain and simple. Disgraceful.

  • avatar
    healthy skeptic

    >> The law, a protectionist move benefiting the state’s auto manufacturers, was initiated by the Michigan Automobile Dealers Association.

    Um, I think it protects the state’s dealers, and that’s about it. The only “benefit” Michigan’s manufacturers get is to take the easy way out, by forcing Tesla to drag around the same ball and chain they all have to, rather than breaking free of the ball and chain themselves. I guess that’s a benefit, in some abstract sense.

  • avatar
    eggsalad

    Michigan uses more road salt per road mile than any other state.

    Why? Because the faster your car rots, the faster you’ll buy another one.

    It’s good for the economy!

    • 0 avatar
      SCE to AUX

      Pennsylvania must be a close second. People here believe it’s a constitutional right to purge every snowflake from the roads, and then they still buy Subarus.

    • 0 avatar
      stevelovescars

      Michigan also uses a lot of road salt because there are huge reserves of it right under the state. It’s really cheap here. There are salt mines directly beneath Detroit. http://detroitsalt.com/

      Having just moved back to the state after living in California for 20 years, I was just amazed to see late-model cars and trucks with perforated fenders… I’m talking 5-6 year old cars. It’s just horrific. It’s worth flying out of state and driving back to find a good used car.

  • avatar
    TrailerTrash

    Here is my biggest Bit#H with the Tesla…it ain’t friggin work half its price.
    To hell with all the Tesla true believers…it sucks as a 136 thousand dollar car.
    One. Hundred. Thirty. Six. Thousand. Dollars.
    I know it sucks.
    I have driven my brother’s car now for two years. And bro Steve has his new X…which have finally gone into legal world with lawyers.
    Mike’s car…every time I get in, reminds me of the quality of no better than a 36K car. Hard seats and painful arm rest.. Bland dash.
    Steve’X now has been in repair so much longer than he has had it…he is legally trying to get them to give him a new one…or give a refund.
    The gull wing doors have never worked as well, constantly having issues.

    And now I finally get some agreement. Here is the review of C&D’s 2015 S…and read WHAT WE DON’T LIKE:Quality and repair cost suck.
    OK…so what they DO like is driving occupants crazy with their first hoonigan electric power from start up.
    I go through this with my brothers every damn time I get in…my neck can’t take anymore.

    http://www.caranddriver.com/reviews/2015-tesla-model-s-p85d-long-term-test-update-review

  • avatar
    cdotson

    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.

  • avatar
    dukeisduke

    The Soup Nazi never said sorry.

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