Michigan politicians are trying to block new electric vehicle manufacturers from doing business in the state. Although carefully worded to include any type of auto manufacturing company, the Michigan “Motor Vehicle Franchise Act” was created specifically to block Tesla from doing business there, an obvious favor to the dealerships. The law already includes certain restrictions on auto manufacturers, restrictions that limit their ability to sell and service their vehicles in the state.
The upside to this bill is that the language leaves room for creative solutions — such as the 2016 settlement brought by Tesla against the state. The Michigan Attorney General interpreted existing law to allow Tesla and other manufacturers certain sales-type activities at gallery locations. These include consumer education about products (such as EVs), discussions about the price, offering test drives, and discussing financing in order to facilitate online orders and delivery. The only restriction was that the transfer of the title of the vehicle had to take place out of state, to comply with existing law.
A new house bill in Michigan, however, has been introduced by Representative Sheppard (R) to amend the law so that no manufacturer except Tesla can support the sales or service of their vehicles in Michigan. Although Tesla stands to gain from this, it would go against its core mission and I believe it would actually harm Tesla. The company already gets a lot of criticism and outright hate from some of its ardent critics.
It's just such 💩. So many things elected officials should be doing to help citizens of the state … limiting choices should not be how taxpayer $$ are spent.
If you build a better product, consumers will buy it. What are you afraid of, Detroit?
— Bonnie Norman (@bonnienorman) September 19, 2020
The gist of the new bill, House Bill 6233, is that any new auto manufacturer — a company that does not already have an establishment in Michigan — can not come in, set one up, and do business. This is a bold attempt to block the sales of electric vehicles from new companies — whether they be Rivian, Lucid Motors, Xpeng, or another startup — to residents in Michigan. You can read the full bill here.
It Seems Like Tesla Benefits, But It Really Doesn’t
Many Tesla supporters believe in Tesla’s mission, which is to accelerate the world’s transition to sustainable energy. In this regard, the more EV automakers there are, the merrier. We need more EVs on the road. They save lives. A recent study by the American Lung Association showed that if auto sales switch fully to EVs by 2045, this could save at least 6,300 American lives — and prevent 93,000 asthma attacks — a year. Even Tesla’s CEO, Elon Musk, values other EV makers making a serious and compelling attempt — who he does not see as actual competition for Tesla.
Our true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day
— Elon Musk (@elonmusk) January 31, 2019
What Can Be Done To Help?
I spoke with James Chen, Rivian’s Vice President of Public Policy, and he shared his thoughts with me about how frustrating this is. The push for this bill is being spearheaded by conventional dealerships that are threatened by electric vehicles.
“This is the franchised dealers trying to stifle legit competition and prevent the advancement of zero-emissions vehicle technology,” Chen told me. Rivian, an independent U.S. manufacturer of all-electric trucks and SUVs would be blocked from doing business in Michigan if this bill is accepted into law.
The crazy thing is that, here we have an independent private manufacturer — an American company even — being blocked from participating in the “free market” by a state. Chen explained that the incumbent business interests — the dealers — are trying to use legislation to block out all new transportation technologies. “If the franchise dealer model is so great,” he asked me on the phone, “why are they afraid of legitimate competition?”
Chen also elaborated on the focus of the legislation. Legislation should be focused on the worldwide pandemic and challenging budget issues, yet the dealers are rushing this bill through. Why? “Why are the dealers pushing a bill to stifle economic investment into the state by EV manufacturers?”
These are very good questions, and the answer is: follow the money. It all comes back to money — dealers have lost money with Tesla’s business model, “buying directly from the manufacturer and bypassing the dealer altogether,” and this is their way of trying to fight back. The dealers will fight — simply because the elimination of the middle man would be bad for them.
As for what can be done to help fight this from outside — awareness. It’s pretty much all we can do. Letting the voters know what they are voting for and educating them about the shady backroom dealings that take place between vested interests and the politicians involved.
Bonnie Norman, whose role as an early EV adopter (owner of an original Tesla Roadster and also an early investor) wanted to lend support to the other EV manufacturers who are doing their part. “While I’m not surprised to see Michigan playing protectionist games again, it’s really heartwarming to see so many Tesla owners jumping in to help shed light on what is going on in the Michigan legislature. The mission is about accelerating the transition to sustainable energy. In the past, EV owners of all brands have shown up to help Tesla in various state battles. We will be there for Rivian, Bollinger, Lucid, and others as they fight to sell an American product in the US.
“The mission is about accelerating the transition to sustainable energy. In the past, EV owners of all brands have shown up to help Tesla in various state battles. We will be there for Rivian, Bollinger, Lucid, and others as they fight to sell American-made products in the US.”