Gov. Snyder signs bill clarifying only franchised dealers can sell cars

Oct 21, 2014

You can buy this car online.....but not at a Tesla-owned store in Michigan
Credit Tesla Motors

Tesla lost a battle today in its bid to sell its vehicles directly to consumers.

Governor Rick Snyder signed HB 5606 today, after fierce lobbying for and against the bill, which clarifies the language in the state's law requiring auto manufacturers to sell their cars through franchised dealerships, and not through direct sales.

Electric car company Tesla wants to use a direct-sales model for its vehicles.

The Governor said it was already illegal for a manufacturer to sell its cars directly to customers in the state of Michigan.

Dealers worry that allowing Tesla to sell directly to customers might threaten the traditional franchise system, which developed over decades.

General Motors supported the bill, issuing this brief statement earlier in the day:

We believe that House Bill 5606 will help ensure that all automotive manufacturers follow the same rules to operate in the State of Michigan; therefore, we encourage Governor Snyder to sign it.

A blog on Tesla Motors' website entitled "A Raw Deal in Michigan," complained that the amendment was slipped into another bill at the last minute, and was passed by the House and Senate without legislators understanding what was at stake.

"The dark-of-night tactics highlight the dealers’ concerns that their arguments don’t stand up well to public scrutiny," according to the blog.