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Tesla Files Constitutional Challenge (Federal Suit) In Western District Of Michigan

tesla michiganThings are heating up in the Tesla vs. car dealership associations fight, heating up quite a bit. The pioneering electric vehicle company very recently filed a constitutional challenge in the Western District of Michigan.

In other words, things are going to the federal level, meaning that big changes are a possibility within the near future.

A commentator on the Tesla Motors Club forum by the name of “Joel” was generous enough to post the pdf of Tesla’s challenge, giving us a clear of idea of the company’s arguments. Things will certainly be getting interesting.

The conversation that that post kicked off on the forum has been interesting, so I’m going to highlight a couple of comments here that I think are especially worthy of note:

jbcarioca” provided some context:

First, the Michigan law in more or less present form dates from the days of William Milliken, a devout Republican and lifelong Michigander from Traverse City. It was only a short time ago when the “midnight amendment” was attached because of the threat of Tesla.

Many years ago GM, Ford and Chrysler had clout in Michigan, never more than when American Motors chief (think Rambler) George Romney was Governor. However in recent years the power has shifted to more local issues with local car dealers exerting their diminishing clout aided by perhaps one of the more venal Governors in Michigan’s colourful history (how I remember 9th grade Michigan history, bizarrely I loved the course.). So, today we have the Federal Government clearly on the free trade side and wildly colorful charcters such as the Texas car dealer politician who single-handedly killed the republican Party platform position in free trade.

Maybe this is OT and inappropriate, but, we do need to understand that these laws originated when the Big Three had the power and car dealers were small and local, so States stepped in to protect them. At the time GM and Ford, especially, really ran roughshod over dealers who were dismissed without clear cause or penalised with inventory or other issues. It is easy to understand why many States stepped in to protect their own. The laws have outlived their purpose by a few decades, but they will only be outlawed, in my view, when the Federal courts rule. Politically most lawmakers favor open car sales and service but most of them are also ill-equipped to take the moral high ground against large contributors.

Tesla makes some cogent arguments. We’ll see. They chose wisely, focusing on the “Midnight Amendment” rather than the whole. Luckily that critical wording just might win the day for auto manufacturers.

Unaddressed issue that will crop up very soon: Online sales, now being actively pursued, however delicately, by several manufacturers. One way or another that will hit the Supreme Court, especially since Amazon is toying with the subject right now.
Also unaddressed issue that will arise soon, probably in connection with autonomous driving and the NHTSB proposals: online access including updates and things that would be called recalls if done at a dealer. Is mapping update a service function? These issues will arise in the presently ongoing NHTSB proposals.

Notes: in the early 1980’s GM did quite a bit of research on how to set up a company owned distribution system. They gave up over fear of worldwide distributor/dealer revolts. There are other cases, but not relevant here.

So, we cannot avoid politics, but we also need to know that the Tesla Federal action just introduced is about to unleash “the Dogs of War”. Do I overstate this? I’m waiting for amicus curiae to tell me.

jeffro01” made an interesting point as well: “This is going all the way to SCOTUS… There is no way either side isn’t going to appeal any decision all the way up the ladder… Hopefully SCOTUS follows established case law on this, as already noted in this thread, and strikes down all of this crap nationally…”

I can’t argue with that. This seems to me to be a flashpoint of some kind. Big changes may be just around the corner, maybe even in time for the Model 3 launch late next year.

Notably, a few forum members indicated a desire to travel to the hearing location to be in the courtroom at the time. Sounds like it could be quite fun.

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Written By

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.


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