LANSING, Mich. – Electric vehicle manufacturer Tesla, known for bypassing dealers and selling directly to consumers, is afraid an amendment to an unrelated bill would prevent the manufacturer from doing just that, reported Michigan Live.
But the bill’s supporters say current law already precludes that.
That’s the understanding of Terry Burns, executive vice president of Auto Dealers of Michigan, who said “there’s no regulatory change at all in the amendments.”
At issue is HB 5606, which principally addresses a separate issue surrounding the fees auto dealerships charge for preparing documents. However, a language in a substitute from the Senate floor is raising red flags for some.
A Tesla executive told the Wall Street Journal the legislation would prohibit direct-to-consumer sales, and Automotive News has termed it an “anti-Tesla” bill. Tesla’s business model of direct-to-consumer sales has run into problems in other states.
Language in HB 5606 states that a manufacturer may not “Sell any new motor vehicle directly to a retail customer other than through franchised dealers, unless the retail customer is a nonprofit organization or a federal, state, or local government or agency.”
But the Auto Dealers and the bill’s sponsor say that language isn’t new.
The Secretary of State draws that from current law. MCL 445.1574 states that a manufacturer cannot “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.”
That’s a one-word difference from what’s in HB 5606.
HB 5606, which passed both chambers nearly unanimously, doesn’t have anything to do with Tesla, according to sponsor Rep. Aric Nesbitt, R-Lawton. It’s been amended, but “It still doesn’t have anything to do with Tesla,” he said.
He’s not gotten any feedback on the bill from Tesla, though he’s seen media reports. “It seems like they’re using this as kind of a red herring to talk about their issue, which is already covered under current law,” Nesbitt said.
Burns of the Auto Dealers said that the amendment was to clarify the bill’s application to all deals, as some have tried to claim exemptions in the past. It doesn’t represent a regulatory change, he said.
“All the original equipment manufacturers in the world that do business here comply with the law, and it’s worked very well,” Burns said.
Some don’t think the current prohibition on direct-to-consumer sales is working well. Ted O’Neil, director of media relations for free market think tank The Mackinac Center, said allowing consumers to purchase directly from manufacturers would cut vehicle costs.
“We’ve come out in favor of abolishing basically auto dealer protectionism laws. We would think there’s nothing wrong with people who would be able to buy a vehicle directly from the manufacturer,” O’Neil said.
He said the fact that a prohibition of direct sales already exists in Michigan is a product of strong lobbying and donations from auto dealers.
HB 5606 is on Gov. Rick Snyder’s desk, where spokesperson Dave Murray said staff is still reviewing it.
“They’re giving it the due diligence and review before making a decision,” Murray said.
The Governor has until Oct. 21 to act on the bill.