Michigan passes bill to ban Tesla!

[chickensevil]

I talked to the person at the Columbus store a while back about the possibility of opening a store in Toledo (just south of the MI border). I was told Tesla has no plans to do that because they already have all the stores permitted by Ohio law. That makes Columbus the closest store to the Detroit metro area at about a 4-hour drive. When the Cleveland store opens, it will "just" be a 3-hour drive. Indianapolis and Chicago are even worse. Unfortunately, those kinds of drives for sales and service would be a deal-breaker for me if something doesn't change by the time Model 3 comes out. :crying: Hopefully, Tesla and/or Musk will step up to the plate to convince the Michigan legislature to carve out an exemption for them.

The service center location is rarely in an optimal sales location and is instead placed where it can service the most customers in a certain radius. It also likely takes regulations in account on some level as well. Thus is why I specifically used the Rockville, MD location as a great example of getting around the law. I know people who have purchased in Richmond who have taken delivery in Rockville which is a solid 2-3 hour drive (and has two superchargers to make the journey).

But ideally they would just get permission to operate in the state and solve the issue entirely. I am sure there are already owners in Michigan should ask them how Tesla currently makes it happen. But rest assured you will be able to get a Model 3 somehow/someway when it is released.

 

[Joel]

So goodish news they should just be able to do what they are doing in VA right now. Open a gallery where they aren't "selling" new cars and then service the cars out of state. Even in the worst case they should be able to not open a store at all and still service the cars out of state. Not ideal but it could work in areas that are at least close to the boarder of a more "friendly" state.

Michigan's law is currently the most restrictive. It prohibits sales and service centers. Tesla can open a service center in any state except Michigan.

Arizona, Texas, New Jersey, etc. adopted Michigan's language.

This bill is intended to reaffirm that the current law includes Tesla and closes any "loopholes" such as galleries.

 

[snellenr]

IANAL, but I read the new statute and it is much worse than the current case in Texas. I wonder whether even Superchargers could be ruled as a type of "non-dealer, company-owned" service facility that could be forbidden under the new law - in spite of the existing Supercharger.

 

[Joel]

IANAL, but I read the new statute and it is much worse than the current case in Texas. I wonder whether even Superchargers could be ruled as a type of "non-dealer, company-owned" service facility that could be forbidden under the new law - in spite of the existing Supercharger.

I believe that language is currently in Michigan's statute. Our current statute existed before Tesla Motors. The Auto Dealers want to ensure beyond all reasonable doubt that Michigan's law includes Tesla and infringes on inter state commerce.

Michigan's law is in clear violation of the Commerce clause. For example, (of the many provisions), It specifically states an OEM can not own a service center to service recalled items. If GM opened and owned service centers to fix their recall mess, they would be violating Michigan law.

 

[timf]

The changes being made between the existing law and the new law are very subtle. I'm sure most of the legislators didn't even notice them. The key line they added was "(3) This section applies to a manufacturer that sells, services, displays, or advertises its new motor vehicles in thisstate." They also removed the word "its" when talking about a manufacturer doing business through its franchised dealers, so as to clarify that the law applies even to manufacturers that do not have existing franchises.

So yes, clearly aimed at Tesla and designed to close any potential loopholes. However, it doesn't really change the state of Tesla in Michigan since we have been operating under the assumption all along that the law applies to Tesla as is. Even if this gets vetoed as it hopefully does, it's still going to take new legislation to allow Tesla to sell and service vehicles in Michigan.

 

[evme]

So far, the coverage seems to be lacking. Looking at the news feeds only a few places picked up the feed but overall it is fairly silent unfortunately. I hope this improves tomorrow because so far it is not a good sign.

 

[JohnQ]

So far, the coverage seems to be lacking. Looking at the news feeds only a few places picked up the feed but overall it is fairly silent unfortunately. I hope this improves tomorrow because so far it is not a good sign.

As michiganmodels says, manufacturers are already prevented from owning a dealership (except in very specific ownership transfer situations) or owning a service center. They can't sell a car directly to the consumer except for government and non-profit sales. The statute was pretty restrictive already so not sure if there's "news" here. Now, if a number of owners showed up in Lansing with their cars parked in front of the capitol, that would attract the news vans.

 

[evme]

As michiganmodels says, manufacturers are already prevented from owning a dealership (except in very specific ownership transfer situations) or owning a service center. They can't sell a car directly to the consumer except for government and non-profit sales. The statute was pretty restrictive already so not sure if there's "news" here. Now, if a number of owners showed up in Lansing with their cars parked in front of the capitol, that would attract the news vans.

From what I am hearing, this issue is a bit more complex. At stake is hindering of direct sales in a broader sense. Effectively, Tesla will be banned from giving people any information about purchasing a new car. The current law has a loop hole allowing Tesla to provide customers information, with this law, they will be banned from doing so.

Are you saying that is insignificant?

 

[JohnQ]

From what I am hearing, this issue is a bit more complex. At stake is hindering of direct sales in a broader sense. Effectively, Tesla will be banned from giving people any information about purchasing a new car. The current law has a loop hole allowing Tesla to provide customers information, with this law, they will be banned from doing so.

Are you saying that is insignificant?

The specific language in the statute regarding providing information is not changing (section i):

This subdivision does not prohibit a manufacturer from providing information to a consumer for the purpose of marketing or facilitating the sale of new motor vehicles or from establishing a program to sell or offer to sell new motor vehicles through franchised new motor vehicle dealers that sell and service new motor vehicles produced by the manufacturer.

The application of the statute is clarified (3)--this is added language.

(3) This section applies to a manufacturer that sells, services, displays, or advertises its new motor vehicles in this state.

As a result of item (3) it can be argued that Tesla can not open a gallery for the purpose of advertising their vehicle (nor could they, in theory, participate in NAIAS). There is the question of commas in the section i; does that permit manufacturers to provide information regardless of whether they have franchised dealers or does it only apply to a program to sell. Nitpicking but such is the way the law works. if they wanted to limit their ability to advertise without franchises then they should have either repeated the phrase "...through franchised ..." or they would have walled the clause "...or from establishing ..." with commas.

 

[physicsfita]

From what I am hearing, this issue is a bit more complex. At stake is hindering of direct sales in a broader sense. Effectively, Tesla will be banned from giving people any information about purchasing a new car. The current law has a loop hole allowing Tesla to provide customers information, with this law, they will be banned from doing so.

Are you saying that is insignificant?

Would prevent Tesla from bringing cars to show at the NAIAS?

 

[evme]

The specific language in the statute regarding providing information is not changing (section i):



The application of the statute is clarified (3)--this is added language.



As a result of item (3) it can be argued that Tesla can not open a gallery for the purpose of advertising their vehicle (nor could they, in theory, participate in NAIAS). There is the question of commas in the section i; does that permit manufacturers to provide information regardless of whether they have franchised dealers or does it only apply to a program to sell. Nitpicking but such is the way the law works. if they wanted to limit their ability to advertise without franchises then they should have either repeated the phrase "...through franchised ..." or they would have walled the clause "...or from establishing ..." with commas.

The update in the section specifically adds the words "franchised" which was not there before. With the addition of franchised, Tesla would not be able to provide any information at all to consumers since they have no franchises.

Would prevent Tesla from bringing cars to show at the NAIAS?

It goes into a gray territory. Tesla may be able to bring a beta car for example. But if they can be forbidden from NAIAS, possibly.

 

[outdoors]

I have to say this issue would bum me out about Governor Snyder. I liked the fact that he ran on not letting government choose the winners and losers. This would be his opportunity to practice what he preaches. Election year. Doubt it.

Unfortunately the DADA has its nose far up something of the Michigan Legislature.

Called the Communications Director had a 10 min conversation on the issue.


Urge others especially Michiganders to make the call as well. (517) 335-6397

 

[JohnQ]

The update in the section specifically adds the words "franchised" which was not there before. With the addition of franchised, Tesla would not be able to provide any information at all to consumers since they have no franchises.

Not in section (i). The current language still contains the word "franchised." Michigan Legislature - Section 445.1574

(i) Sell any new motor vehicle directly to a retail customer other than through its franchised dealers, unless the retail customer is a nonprofit organization or a federal, state, or local government or agency. This subdivision does not prohibit a manufacturer from providing information to a consumer for the purpose of marketing or facilitating the sale of new motor vehicles or from establishing a program to sell or offer to sell new motor vehicles through the manufacturer's new motor vehicle dealers.

This is copied from the existing statutes. It's the exact same as in the proposed bill.

Item (3) at the end clarifies the applicability of the statute.

 

[Vger]

If this doesn't get resolved before Model 3 time, Tesla will escalate it to the Supreme Court, and the dealers will lose. What a bunch of skeezbags.

I think the time to go Federal has come. Tesla cannot afford to wait for Model 3 to do this.

 

[evme]

Not in section (i). The current language still contains the word "franchised." Michigan Legislature - Section 445.1574



This is copied from the existing statutes. It's the exact same as in the proposed bill.

Item (3) at the end clarifies the applicability of the statute.

Not in the exception:

Before:
"This subdivision does not prohibit a manufacturer from providing information to a consumer for the purpose of marketing or facilitating the sale of new motor vehicles or from establishing a program to sell or offer to sell new motor vehicles through the manufacturer's new motor vehicle dealers"

After:
"This subdivision does not prohibit a manufacturer from providing information to a consumer for the purpose of marketing or facilitating the sale of new motor vehicles or from establishing a program to sell or offer to sell new motor vehicles through franchised new motor vehicle dealers that sell and service new motor vehicles produced by the manufacturer"

 

[ItsNotAboutTheMoney]

I think the time to go Federal has come. Tesla cannot afford to wait for Model 3 to do this.

They can definitely afford to wait.
- Model 3's target is not the US mass market, it's the low end of the luxury market.
- CA's open and there are other, more open states: those are the key states to protect
- they'll have freedom in Las Vegas, a major tourist destination
- At Model 3 pricing and volume Tesla can do a deal with rental companies to get their cars into rental fleets so people can do extended test drives.
- Tesla only has this problem in the USA and if they hit target, Model 3 has huge potential in other markets with a much lower electricity:gas price ratio.
- Having barriers in place helps Tesla's cred and maintains competitive advantage over other manufacturers.
- Tesla doesn't have the Model 3 yet. It's only at higher volume where these barriers could cause problems. If Tesla succeeds in hitting Model 3 price target (a big if), they would have more popular support to drive change in the more restrictive markets. Nothing like an angry middle class to scare politicians.

 

[callmesam]

Since this is an FTC matter, hopefully after Obama is into the final lame duck phase, they may be free to act to punish this type of behavior.

 

[JohnQ]

@evme: yes, you are correct about the addition of "franchise" in the second half of that section. I read it as being there in the original when it wasn't.

Though I'd think that any argument about protecting consumers or regulating the sale of vehicles would fall woefully short if the "communication" section of that clause were challenged in court. Having said that, I don't think it would be in Tesla's interest to challenge this piecemeal in Michigan.

What does anyone think about pulling out of NAIAS in a public manner in response to this legislative change? It would be an enormous publicity coup. Worth far more than attending.

 

[physicsfita]

What does anyone think about pulling out of NAIAS in a public manner in response to this legislative change? It would be an enormous publicity coup. Worth far more than attending.

I hope Tesla is trying some sort of rope-a-dope strategy here -- it would be an interesting play...

 

[efusco]

This is the modus operandi for NADA, same very subtle language slipped into an unrelated or minimally related bill but that has a sweeping impact on the Tesla business model.