Tesla Vs Michigan (UPDATED): Dealership Application, Conservative Coalition, Ballot Push

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Tesla Store Los Angeles [photo: Misha Bruk / MBH Architects]

Tesla Store Los Angeles [photo: Misha Bruk / MBH Architects]

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Electric-car maker Tesla Motors is the fourth-largest U.S. car maker, but its home in California's Silicon Valley is far from the heartland Detroit base of GM, Ford, and Fiat Chrysler.

In Michigan, Tesla is banned by law from selling cars directly to buyers, and from opening Tesla Store retail locations.

Now, new skirmishes on several fronts have opened in the company's ongoing and lengthy battle to sell cars legally in the state.

CHECK OUT: Where Can Tesla Legally Sell Cars Directly To You? State-By-State Map

In November, Tesla applied to the Michigan Secretary of State's office for a "Class A" license to sell new and used cars in Michigan, according to The Detroit News.

That license requires a dealership to have a repair facility as part of its business, or a relationship with a licensed repair facility, according to state officials.

The News article quotes news service Michigan Information & Research Service, which first reported the Tesla applications, explaining Tesla could contract with any person or entity to sell its cars--except itself.

That could even include a former Tesla employee, it said, who could be required under a franchise agreement to ensure that a "Tesla dealership" looked, acted, and conducted business precisely the same way as the Tesla-run stores in other states.

2016 Tesla Model S

2016 Tesla Model S

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UPDATE: After news of its dealership application broke yesterday in The Detroit News, Tesla Motors issued the follow statement to a number of media outlets, including Autoblog Green and the News, to clarify its position:

As recently amended, current Michigan law prohibits Tesla from being able to license its own sales and service operations in the state. Submission of the application is intended to seek the Secretary of State's confirmation of this prohibition.

Once confirmed, Tesla will review any options available to the Company to overturn this anti-consumer law.

Conservative coalition

At the same time, Tesla has quietly assembled a coalition of conservative groups in the state to press for the law to be revised.

The Freedom To Buy coalition, according to industry trade journal Ward's Auto, includes representatives of the Michigan Christian Coalition, the Michigan Moose Association, the Michigan Conservative Energy Forum, and the Michigan Federation of College Republicans.

All have lined up behind the proposition that carmakers should not be told how or where to market and sell their products to consumers.

“It’s basic free-market economics," according to a representative of the College Republican federation.

A representative of the Michigan Automobile Dealers Association, who said he had not yet seen information about the campaign, suggested that the current law "serves manufacturers from all over the world, dealers and consumers.”

State map showing where Tesla Motors can (blue) and can't (red) sell cars [Mojo Motors, Apr 2015]

State map showing where Tesla Motors can (blue) and can't (red) sell cars [Mojo Motors, Apr 2015]

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Ballot petition too

Finally, Mick Yille, a 22-year-old University of Michigan graduate, plans to launch a ballot petition drive to permit automakers to sell cars directly to buyers.

According to trade journal Automotive News, he must collect 252,000 signatures (2.5 percent of the state's population) by June 1 just to get a proposed bill before state legislators.

Those are the same elected officials who passed a bill in October 2014 requiring all new vehicles in the state to be sold exclusively through franchised third-party dealers.

Michigan governor Rick Snyder signed the bill the next month, noting its bipartisan support and the lopsided votes in favor of it.

The bill, he said at the time, simply "clarifies and strengthens" existing law "about direct auto sales" in the state. General Motors had campaigned for passage of the bill on behalf of its dealers.

Michigan Governor Rick Snyder with Ford's steering wheel technology at ITS World Congress, Detroit

Michigan Governor Rick Snyder with Ford's steering wheel technology at ITS World Congress, Detroit

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'Corrupt politics'

The language change--inserted at the last minute into a bill on franchise law by a legislator married to an auto-dealership lobbyist--was called "corrupt politics at its worst" by Daniel Crane, a law professor at the University of Michigan.

In a 10-page letter sent to Michigan legislators last year, The Federal Trade Commission urged them to reconsider the overall direct-sales ban. It said the ban leads to "protectionism" for dealers and is "likely harming both competition and consumers."

Since then, Tesla has offered test drives in the state, and its executives have met with representative from dealers and other makers, legislators, and officials from the governor's office.

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