Last week, we reported on Tesla filing a lawsuit against Michigan Governor Rick Snyder and other state officials over the ban on direct car sales from automakers to consumers. The suit was filed after the Secretary of State denied Tesla’s application for a dealer license due to a law preventing an automaker from operating a car dealership.
Tesla claims that the law “violates the Due Process, Equal Protection, and Commerce Clauses of the Constitution”.
Gov Snyder commented on the situation for the first time this week and while he says that he is open to working with Tesla, he insists that they have to go through dealerships, which is really the only matter at hand in this situation.
At a reception for the World Mobility Leadership Forum, he told The Detroit News:
“I think if you look at what’s going on with mobility, we’re clearly the leader. I’m always open-minded to working with people, they just need to work through the traditional legislative process or, as they’ve apparently decided, to go through the courts instead.”
The legislative process is actually what forced Tesla to go through the court. In 2014, Tesla was working toward establishing a presence in Michigan in order to sell and service their vehicles, but a strong lobbying effort on the state legislature from dealership associations and some automakers in Michigan, like GM, pushed them to block Tesla.
Gov Snyder signed into law an amendment to “clarify” the position of the state in regards to automakers selling vehicles directly to customers without going through third-party dealerships, which effectively banned Tesla from operating in the state through its direct sales model.
While the governor says “we always been open to working with them in some fashion”, he still insists that Tesla should go sell its vehicles through third-party dealerships….which is the whole point of contention.
As we previously reported, Tesla explains that it doesn’t make sense for the company to use a franchise dealership model. The company says that dealerships don’t want to sell electric vehicles either due to the lack of desire or knowledge. Of course, the other important reason is that dealerships make most of their profit on service and upkeep on the vehicles they sell, while Tesla aims not to make a profit on service. Electric vehicles traditionally need much less upkeep than ICE based vehicles.
Additionally, GM CEO Mary Barra used the Michigan ban, which it is helping finance, to differentiate its Bolt product from the upcoming competing Model 3 – as if there wasn’t room in the market for 2 competing affordable EVs.
A recent study on the electric vehicle shopping experience partially gave reason to Tesla and found that a lot of dealerships are not even charging electric vehicles on their lots resulting in potential buyers not being able to get test drives.
Our experience has been similar in our Volt test drives where we saw the dealerships recommending other cars, hiding the EVs and not knowing how to keep them charged.
We will be following the court case.
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