Michigan Might Kick Tesla Back Out
Yesterday, the Michigan House of Representatives (the lower state legislative body) passed a bill that would again prohibit Tesla from operating sales and service centers in the state, effectively reversing a settlement earlier this year allowing Tesla to operate in the state.
Prior to January 2020, Tesla was not able to operate in Michigan unless they sold their cars and serviced them indirectly through dealers, like other manufacturers. In 2016, Tesla took the state to court, starting a multi-year legal battle to allow direct sales by a vehicle manufacturer in the state. Eventually, the state of Michigan settled with Tesla, allowing sales only if the final sale occurred, at least on paper, outside of the state. They also allowed Tesla Michigan, a subsidiary of Tesla, to service Tesla vehicles in the state.
An earlier version of House Bill 6233 had language that recognized the state’s settlement with Tesla, effectively enshrining it in law, but an amendment removed that language, putting the bills wording at odds with the settlement. If passed by the state Senate and signed by Governor Gretchen Whitmer, Tesla would once again not be able to legally operate sales or service facilities in the state.
House Minority Leader Christine Greig attempted to change the bill to allow a limited number of electric vehicle companies to operate in the state with direct sales and service to customers, but her amendment did not pass. “It does not solve the problem that we have with the lawsuit with Tesla,” Greig told The Detroit News. “It opens up the state to additional litigation, which costs taxpayer dollars. And it also is a very anti-market approach to vehicle sales.”
Prior to January, Tesla owners had to go to Ohio or Illinois to get vehicles worked on, which can at times be a hardship for Tesla owners. In another article, I covered the difficulty a New Mexico owner had when his drive unit failed in Albuquerque. Like Michigan prior to 2020, New Mexico does not allow sales or service direct to customers. In that case, Ian V. had to let Tesla tow his vehicle all the way to El Paso, Texas, for a drive unit replacement, a four-hour drive. After service, he had to pick up the vehicle himself because Tesla does not cover the “reunite” after service out of state. To do this, he had to rent a car on his own dime and drive nine hours round trip to retrieve his Model S.
Similar stories in other anti-Tesla states can be found online.
If you live in Michigan and want to oppose House Bill 6233, it has not yet passed the Senate and must also be signed by Governor Whitmer before becoming law. You can find your Senator’s contact information at the State Senate website here, and contact Governor Whitmer here.
If you don’t live in Michigan, the lack of Tesla service could still negatively impact you as a Tesla owner. You might want to contact the Michigan State Senate leadership listed on this page, and contact Governor Whitmer to let her know that your future tourism dollars might be at risk due to this bill.
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Each state sets their own rules for vehicle manufacturers to sell vehicles.
In many states, similar laws are on the books that require automobile manufacturers to sell vehicles through franchises owned by someone other than the manufacturer. Auto dealers say that this is necessary to protect customers from the manufacturer and help them get better deals on vehicles through competition, while critics say that the dealers have used their sway with state legislatures to have themselves put in as unnecessary middlemen to fleece customers of their hard-earned money. Both arguments are frequently heard in legislatures considering changing the law.
While Republicans generally support free markets, they tend to oppose Tesla operating in more states, possibly because they prefer to favor oil companies and dealer associations in their state.
In recent years, more states have allowed Tesla and other alternative fuel vehicle manufacturers to sell vehicles directly to consumers. In some cases, they relax the requirement and allow more manufacturers to do direct sales and service. In other cases, only a narrow exception is made for cleaner vehicles, or provide a limited number of special licenses for direct sales.
If you are a Tesla owner or prospective buyer, be sure to check your state’s laws and see what the situation is in your state. Most state legislatures meet at least once a year, so be sure to watch out for bills that can help or hurt Tesla owners in your state.
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