direct sale

In October 2014, Michigan Governor Rick Snyder signed a bill, which was initiated by the Michigan Automobile Dealers Association, to “clarify” an existing law banning automakers from owning or operating car dealerships in the state, ultimately forcing them to go through a third-party franchise model.

The new bill effectively banned Tesla from selling cars in the state due to the company’s direct sales model. Today we learn that despite the ban, Tesla applied for a dealership license in Michigan.
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The FTC held a conference yesterday titled “Auto Distribution: Current Issues & Future Trends” with a particularly interesting panel about direct distribution. The panel discussed the laws in certain sates which restrict the ability of car manufacturers to sell their vehicles directly to the consumer, and instead force them to go through independent franchised dealers.

Panelists included two automaker representatives, Tesla Motors’ General Counsel Todd Maron and Elio Motors’ Vice President of Government Affairs Joel Sheltrown. Both companies are trying to established their own network of stores and don’t want to use the dealership model.
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Even though Tesla is not officially attending the Detroit auto show this week, the company managed to use the event to shine a light on the regulatory hurdles it is facing in the state of Michigan. Tesla’s vice president of business development Diarmuid O’Connell talked to MLive and confirmed that the company skipped the Detroit auto show this year because of Michigan’s direct sales law.
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