Michigan Bill HB 5606 to prohibit Tesla sales [TSLA] in Great Lake State


DETROIT, October 18, 2014 — Michigan Governor Rick Snyder has until next Tuesday, October 21, to sign Michigan Bill HB 5606 into law. The bill, which prohibits automakers from selling cars directly, would effectively ban electric car company Tesla from selling automobiles in the state.

Tesla is a unique car company known for its stylish, ground-breaking electric vehicles. The company recently wowed the automobile world, unveiling the Model D and a bevy of new features.

READ ALSO: Market skeptical of Tesla (TSLA) battery plant plans

The company also does not distribute vehicles through dealerships, and instead sells its cars directly to the public. It is currently the only car company that sells its product directly to consumers.

The Governor is faced with a difficult decision over the bill. On the one hand, Michigan is home to U.S. auto makers and has a long history with the car industry. The powerful National Automobile Dealers Association (NADA) backs the law. NADA spokesman Charles Cyrill released a statement noting, “States are fully within their rights to protect consumers by choosing the way cars are sold and serviced,” he went on to note, “Fierce competition between local dealers in any given market drives down prices both in and across brands. While if a factory owned all of its stores, it could set prices and buyers would lose virtually all bargaining power.”

Tesla opposes the bill. Elon Musk, a beloved rock-star among Tesla aficionados, has fought similar legislation in Georgia, Missouri, New Jersey, New York, Ohio and Pennsylvania. Those states ultimately worked with Tesla to come up with a compromise acceptable to both sides.

READ ALSO: Tesla’s (TSLA) Elon Musk promises increased production, Hyperloop

Tesla’s web site includes a post calling the bill “harmful to consumers.” The post further states,

Not content with enshrining their ability to charge consumers dubious fees, on the last day of the legislative session, the dealers managed to make a last-minute change to the bill in an attempt to cement their broader retail monopoly. Using a procedure that prevented legislators and the public at large from knowing what was happening or allowing debate, Senator Joe Hune added new language in an attempt to lock Tesla out of the State. Unsurprisingly, Senator Hune counts the Michigan Automobile Dealers Association as one of his top financial contributors, and his wife’s firm lobbies for the dealers.

By striking a single, but critical, word from MCLA 445.1574(14)(1)(i), the law governing franchise relations in Michigan, the dealers seek to force Tesla, a company that has never had a franchise dealership, into a body of law solely intended to govern the relationship between a manufacturer and its associated dealers. In so doing, they create an effective prohibition against Tesla opening a store in Michigan.

This amendment goes even further. It also seeks to prevent Tesla from operating a gallery in Michigan that simply provides information without conducting sales. We could even be barred from telling people about our car.

This anti-competitive behavior mirrors similar tactics in New Jersey and Missouri, where dealers have resorted to backroom political maneuvers to shore up their monopolies. The dark-of-night tactics highlight the dealers’ concerns that their arguments don’t stand up well to public scrutiny.

READ ALSO: Tesla [TSLA] intros the Model S “D” with AWD performance and auto pilot

Indeed, no consumer unaffiliated with dealers would ever want this. Officials at the Federal Trade Commission have spoken out about the potentially harmful consequences of the dealers’ anti-competitive behavior, saying “competition ultimately provides the best protections for consumers.” Leading economists have also weighed in, saying dealer monopolies come “at the expense of consumers and innovative technologies.” And in September, in considering a similar body of law, the Massachusetts Supreme Court handed down a ruling that made it clear that such laws were not intended to exclude a manufacturer without franchise dealerships from selling to consumers directly.

While the car dealers’ anti-consumer bill has made it through the legislature, it has yet to be signed into law. The bill is now on Governor Rick Snyder’s desk. We are calling on concerned consumers to contact the Governor and urge him to veto this legislation and return the issue to the legislature for a full and open debate in 2015.

READ ALSO: DigiDriveAuto – Read all our latest reviews

Currently, Tesla does not sell cars in Michigan, but does report 50 registered Tesla owners in the state. The nearest Tesla outlet is located in Columbus, Ohio.

According to Detroit insiders, car companies are not responsible for the legislation, and have stayed out of the fight. “U.S. car makers are still trying to figure out Tesla, to see where this wave is going to go, and to understand if there are potential partnerships. Frankly, they don’t want to alienate Musk,” says one former GM executive who asked not to be identified, “but the dealers? Yea, they are worried.”

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Lisa M. Ruth
Lisa M. Ruth is Editor-in-Chief of CDN. In addition to her editing and leadership duties, she also writes on international events, intelligence, and other topics. She has worked with CDN as a journalist since 2009. Lisa is also President of CTC International Group, Inc., a research and analysis firm in South Florida, providing actionable intelligence to decisionmakers. She started her career at the CIA, where she won several distinguished awards for her service. She holds an MA in international relations from the University of Virginia, and a BA in international relations from George Mason University. She also serves as Chairman of the Board of Horses Healing Hearts, and is involved with several other charitable organizations, including Habitat for Humanity, The Boys and Girls Clubs of America, and AYSO.
  • Tom Smith

    Just love American car companies. They can’t compete on quality (example: GM with almost 30 million recalls this year), so they pass laws to prevent competition. Only in America!

    • Mikeq

      This is from the car DEALERS, not the manufacturer. Did you read the article?

    • Pbhead

      It is called crony capitalism. People/parties/companies will use political power to try to further their goals. It is no different from people voting particular ways to protect their tax breaks, food stamps, obamacare, whatever. People vote now, not to preserve the law, but to give themselves money, it will probably not end well.

    • rokidtoo

      The manufacturers oppose these state franchise laws. The National Automobile Dealers Association (NADA) represents the dealers, not the manufacturers, interests. You can buy almost anything, except cars, online.

    • hasanhh

      Yep, Tom, you are also correct on this. Back in the 70s, Congress passed “protection” for the Big 3 + AMC from Japanese cars and all they did was raise prices.

  • Pbhead

    I dislike Tesla, Their cars are often worse for the environment than regular cars, if you look at all the things, particularly the manufacturing of the batteries, and the efficiency of those batteries. the power grid has about a 50% efficiency, the batteries about 90% charging and discharging, and the motor varies, but claims 88% as typical, which gives an energy efficiency of about 35.64%, which doesn’t include the efficiency of the power plant itself or the production and transport of the fuel for the power planet, vs a typical 35% for a gas engine, or 37-44% for diesel, which, to be fair, also does not include the efficiency of the production and transport of the fuel.

    However, people/parties/companies should be able to buy and sell cars as they please, without being forced to go through a middle man. The dealer system is old and out of date, do not reinforce it with bad laws.

    The particular complaint about by Charles Cyrill , is answered by one word: Internet. Competition is without borders these days, only shipping costs, which are much cheaper than dealer costs. Get used to it.

    • Tom Terrific

      A lot of numbers there. No truth.

      • Pbhead

        Thanks for the enlightening response stuffed full of the truth I am so apparently missing.

    • JustAsking

      Not sure where the 50% number came from. Distribution across the grid loses about 6%. Maybe the power plant efficiency is included in your number?

      Another thing to consider is that electric cars are flexible on the type of fuel/generation used by the grid. That is, they do not rely exclusively on oil. This allows for better overall management of the power needs. One more thing, think about how the electric car fleet could be viewed as mass storage of cyclical renewable energy (wind, solar, tidal, etc).

      • Pbhead

        Disqus didnt like me posting a link to my source.

        You were right. I was wrong. It was the one number i did not look up ahead of time, and i should have. It is not ~50%. it is ~66%, and that number includes power planet efficiency. google “department of science energy flow diagram” It is the first result.

        However, I also did not talk about the life cycle of the batteries themselves. lots of fun stuff there. feel free to look into it.

        • JustAsking

          The first link from your suggested search (science engergy gov) shows consumption across the board. And it is a bit confusing to try to determine the effective power plant efficiency.

          Here is a quote from MIT News that discusses the Carnot Limit, the theoretical limit to these type of energy conversions:

          “Today, conventional steam engines can reach efficiencies of 25 percent, and gas-fired turbine steam generators in power plants can reach 40 percent or more — compared to a Carnot Limit, depending on the exact heat differences in such plants, of about 51 percent. Today’s car engines have efficiencies of 20 percent or less, compared to their Carnot Limit of 37 percent.” – David L. Chandler, MIT News Office
          May 19, 2010

          So car engines have about half the efficiency of the large power plant.

          • Pbhead

            yes, car engines have less efficiency of a large power plant, That is obvious. but all the inefficiencies are multiplicative. With electric cars there are many points of inefficiencies, the power planet, the lines, the substations, the chargers, the batteries (twice), and the engine itself, all which must be multiplied together with gas vehicles, it is just the engine. (obviously excluding common sources of inefficiencies past the engine: air resistance, tire compression, and what not.)

            What you missed is this:

            About two-thirds of the 40 quads used to generate, transmit, and distribute electricity is lost at power plants and in power lines, resulting in 13 quads of utilized electricity

          • JustAsking

            Thanks for pointing out my miss.

            Yes, that makes sense. since basic efficiency is at roughly 40% and line loss is 6%. These two account for most of the 65+% loss.

            So that means that the electricity as delivered is at about 34% efficiency. It is unclear what efficiency we can put on gasoline/diesel by the time it makes it to the pump, prior to the 20% efficient engine.

            So reading around that area of the page I see this:

            Petroleum refining is the largest industrial consumer of energy.” How does that play into this whole equation?

          • Pbhead

            that means that 32% of our energy production is used for petroleum. gas sure, but that will also include plastic, asphalt, jet fuel, whole lot of everything. It probably also includes the production of the natural gas used in the power stations for the electric cars.

            It is probably far to complicated to nail it all completely. There is another path to the answer: In a free market system, the cost of is theoretically very strictly tied to the energy required to produce , but there is so much in taxes, regulations, subsidies and whatnot, in all three of the power, auto, and petrol industries that I doubt a cost analysis of car + maintenance + gas prices vs electric car + maintenance + electricity prices over the life of the vehicles would be particularly telling either.

            And then there is the battery production, which is hairy. And also the electric motors used in these cars usually use boatloads of rare earth elements, which… well… here is another fun google search for you “technologyreview the rare earth crisis”

    • hasanhh

      Don’t worry, a new technology is in the pipeline.

  • Anonymouse

    Strangely enough I think that all this bill will do is empower car dealers and allow them to set prices for vehicles rather than the people who sell them. As far as I know there are no other industries who are prevented from selling their product directly to the consumer and it would seem a violate of the first amendment to even attempt to do so..that being the freedom of association.

    This is a bad law and should be challenged at the highest levels. All that this law will do is make an expensive vehicle even more expensive due to adding middle men.

    • bowenj10

      Unless you’re a senior citizen, you’ve probably never been to a movie theater owned by Paramount Studios or a gas station owned by Exxon.

      Just because you don’t know that companies in other industries aren’t permitted to integrate vertically doesn’t mean that there aren’t companies in other industries that can’t integrate vertically.

      • Anonymouse

        This has nothing to do with vertical intergation. This has to do with a producers right to sell directly to a consumer without involving someone who contributes nothing to the process and is essentially another consumer taking his part out before the first consumer gets a chance to deal with the producer.

        None of the other nonsense similar to this should have happened either and it still amazes me that we defend such behavior.

        If I lived in that state and this was against the law, I’d do everything I could to break that law just in protest. I’m not one to allow government to intrude where they are not permitted and this is clearly one of those cases.

        A better headline would have been “Michigan Mulls Whether They Want to get Involved in a Constitutional Showdown for No Good Reason”

        • Pbhead

          Which constitution?

          I am not familiar with Michigan’s, only the national… but trying to use amendment one, as your first post suggested, seems like it would be a very weak argument. Not saying you are wrong, but that there is simply to many precedents to the contrary.

          • Anonymouse

            Its not weak at all. The right to trade is the right to associate and the right to determine the level of association between the two individuals themselves and not allowing government to dictate that association.

            Again I say. If the state passes such a law it should be ignored. Go the manufacturer and buy what you want. Its your business, not a car dealer, and certainly not the governments.

            What can Michigan do to Tesla anyway? Tesla is in California….If they or anyone else ships you a car that is a private transaction that is perfectly legal under free market principles.

        • hasanhh

          Example: mattress factory outlet

        • bowenj10

          I don’t care about your feelings about the merits of this kind of behavior. The fact is, this is standard practice in a number of industries. Once again, the fact that you don’t know that fact doesn’t mean that it’s not true.The proposed bill is nothing NEW. It’s simply a reiteration of already existing laws.

          Also, whether you realize it or not (and I’m definitely leaning towards NOT) dealers DO contribute to the process. Regardless of ownership, someone has to be on the front line interfacing with customers to ensure that manufacturers are producing what consumers actually want. This is true whether it’s a separately-owned dealership with selling rights or a factory outlet store. Selling directly out of the factory when you have thousands, if not tens or even hundreds of thousands, of customers is simply inefficient. It would simply result in manufacturers creating separate departments with dispersed consumer-friendly buildings whose sole purpose is to match consumers with their desired products. Those buildings would have to be staffed with managers, sales people, and possibly even service people (the addition of service departments at car dealerships is a relatively recent phenomenon). Those employees and the facilities they work in would add cost to the price of a product (overhead). Regardless of whether you want to call these places dealerships or outlet stores, their function – matching consumers with their desired products – would be the exact same as that of the current dealerships and outlet stores.

          The real issue is whether manufacturers should be selling directly to the consumers through their own dealerships, NOT whether there should be dealerships. That you think there isn’t a need for dealerships shows that you don’t know what you’re talking about.

    • ricksanchez1

      The GOP’s love to talk publicly about increasing business, innovating, “Made in Amercia”. Now you see behind closed doors, the strongarm dealer lobbyists get together with them to do all they can to shut down and prevent Tesla from succeeding. Vote Libertarian and let the market decide what you can buy.

  • george shed

    So the SOCIALIST STATE OF MICHIGAN where some of the most defect ridden cars on the planet are mass marketed only to fill up landfills with rusting hulks of crapboxs – is going to ban Tesla.

    Gotta protect the wasteland of Detroit.

    The last BIG-3 car I owned had the following problems BEFORE 60K miles (yes this is one car!):
    2 blown head gaskets.
    1 blown alternator
    1 blown AC compressor
    2 bad power windows

    And the SOCIALIST STATE OF MICHIGAN government is worried about Tesla???????

    Just say NO to GM, Ford, Chrysler.

    • Pbhead

      Well, Rick Snyder /is/, in theory, a republican. which means, in theory, he should do his best to preserve the free market, which, in theory, means opposing this change. But I guess we will see.

      • Jack Gardner

        Republicans parrot whatever their handlers (Koch brothers) tell them to parrot. They do not stand for anything, only against whatever the other side is promoting.

        • Pbhead

          That is a cute little conspiracy theory. Usually, however what ‘the the other side’ is promoting is directly contradictory to what the founding fathers intended: A federal system of government, with very few national powers (as article 1 section 8 lays out), and most of the powers delegated to the states, as amendment 10 demands.

          Example: A national minimum wage. The constitution does not explicitly give the national government the power to regulate wages of the private sector, thus that power should be delegated to “the states or to the people”.

          It should not be too difficult to understand.

          While it is true that the Republicans do not always get it right, the democrats almost always seem to get it wrong.

          • Michael E Munson

            You mean the great depression, great recession, opposing medicare, opposing social security,opposing de-segregation, opposing pretty much anything that eventually became wildly popular historically? Those republicans? I assume you are old and white. Historically the republicans are always on the wrong side of history. They are already running as fast as they can from opposing gay marriage as they have realized they took the wrong side……again!

          • Pbhead

            sorry. de-segregation was a republican thing. medicare and social security are both unconstitutional, and only made it into law because a particular someone remained president long enough for all the old judges to die off, and pack the court with his own. depressions are not wildly popular, but Bush did warn congress about the housing bubble and all that stuff multiple times before it popped, and hoover had some very interventionist (not free market) policies which lead to the problem, and then FDR only tried to intervene further, which left america in the depression much longer than other nations like Great Briton.

      • rokidtoo

        If Rick Snyder is interested in free market competition, he’d let Tesla, and every other manufacturer, sell cars the way they want to. Of course, he’s not interested in the free market.

        Let the auto manufactures sell through a dealer network, through factory stores, or online. If they can sell cars competitively by giving the middlemen, i.e. dealers, a big cut, so be it.

        However, if states didn’t mandate that all cars must be sold through dealerships, you know Amazon would be selling cars. However, Amazon can’t offer new cars for sale, because it’s against the law in all 50 states.

        The dealers and the politicians will swear that they’re looking out for consumer welfare. Right! Their engaging in corporate, rent seeking welfare.

        • Pbhead

          I agree that states shouldn’t mandate cars to be sold though dealers. any republican should be able to say that.

          But I also say that it would be down right dickish to use my vote and tell the other 49 states I don’t live in how they should do such things. As democrats often do. It is why republicans are often seen as the party of ‘no’. Only because democrats try to force their things on the entire nation, instead of only their blue states.

          • rokidtoo

            “But I also say that it would be down right dickish to use my vote and
            tell the other 49 states I don’t live in how they should do such things.”

            Did I say anything about a federal mandate? No. Did the article say anything about a federal mandate? No.

            What I stated is that dealers have created an environment in which consumers are hurt by higher than necessary auto prices because of crony capitalism. Furthermore, every state, Democratic and Republican, has similar franchise laws designed to support dealership corporate welfare at the expense of everyone else.

            Perhaps it appears I’m attacking Republicans because of their constant, and hypocritical espousal of free market ideology, i.e. competition for everyone except their campaign donors.

          • Pbhead

            ya, something like that might be considered an attack.

            maybe you and I can start a grass roots something to start repealing these laws. that might be fun.

            And while we are at it, we can see if it is the red states or the blue states repeal them. wouldn’t that be fun as well.

    • pgm554

      Had a 91 Chevy Cavalier that had over 400k before I sold it.
      Most expensive repair was new clutch and ring gear @$400 bucks.

      Same engine ,no major repairs .

    • hasanhh

      I had an AMC in the 70s and everyday something different was wrong/broken with it. Only god can understand how much I hated that car. Then I got a Ford Fairmont, not one of the “good-ones’ that lasted for years, but one of the “bad-ones”. It used oil so I had to add every week, the EGR went out and the car would not idle, 5 or 6 water pumps, one voltage regulator, and so forth. Then I had a used Chrysler Cordoba, which after I got it running, only the air-conditioner locked-up (like my parents’ Matador) but ran fine until the heater blew while I was driving and got sprayed with hot radiator water (got safely stopped). I also had a wheel drive replaced. Then I got a Jeep Laredo(used) and ran that for years. Until the electrical system fizzled, I drove that for years without problems and modified it to increase highway mileage. Now I have a Chevy 2005 Trailblazer, self-modified, and it runs good. Highway 24+mpg, 15-16 City; handles well and only replaced tires and a front window (I broke it).
      The Big Three self-destructed. The “old-Boys” were dull-boys. Now the industry is improving.

    • Joseph Kool

      Socialist state of Michigan? Says the guy from California.

    • 3_percent

      Hey George you might want to look into the definition of Socialism as its not really the problem in this case. This is a matter of private industry creating a monopoly than using their wealth to influence laws to prevent competition … something the concept of ‘democratic socialism’ as in the case of health care actually circumnavigates. Should probably also be noted that Rick Snyder who signed this bill is a republican, the party that bills itself as ‘anti-socialist’.

      Just want to point that out in case your genuine concern is whats best for the small business and the consumer so you or others reading don’t make the mistake of voting against your own personal interests in Nov.

      • george shed

        No its a matter of a huge mass of UNION state workers and UNION auto workers who form a voting block large enough to sway every close election in their favor. Who pays for it? Home owners with massive property taxes.

  • abcdefgqwerty

    Dont dealers just add to the price of the cars? I cant remember any amazing bargains I got from any of the car dealers. I dont buy it. Would probably be better prices buying direct from tesla verses another set of people getting a cut.
    Yeah in a broke city lets ban a huge company from going there and selling cars. Smart idea to me.

    • kbghost

      a whole industry (car dealerships) was politically created to solely come in between you and the car manufacturers. the existence of them is built off of your dime, so yes, all they do is add costs while posing to be for your benefit. its corrupt politics at its finest, a politically enforced monopoly

  • h5n5

    Car dealerships simply are the middleman, and they have been making money from elevating the car maker’s prices for awhile now. With Tesla coming in and selling directly to consumers, those dealerships feel threatened in the face of technological/economic advancement and improvement. They do not want to lose their selling power. This is repeated throughout history where groups that have been in power do not want to give it up even though it would benefit and advance society as a whole. They just keep wanting to make the dirty money.

    • Pbhead

      One of the biggest problems of democracy. from the simplest ‘two wolves and a sheep’ and all, all the way up to the 51% will vote to take the money of the 49%. The national constitution was set up in such a way to prevent that, but no one seems to remember that document any more. Or, at least the 51%.

      • tiredofdogma

        What point are your posts trying to make? WTF? Bizarre and rambling

        • hasanhh

          He is expressing the general dissatisfaction of simple majority politics.

        • Pbhead

          If you are truly interested in understanding my point of view, I will do my best to explain it, and i am sure we can find a better form of communication than disqus to do that. But I assure you, it is not bizarre, it is built on many warnings from the past about what will happen if our system of government is abused.

      • h5n5

        If we read the Constitution, we would realize that the Founding Fathers feared creating democracy, which is why we have both the House and the Senate so that the smaller states can have an equal voice. The US is really a representative republic, not a democracy. 49%, though the minority, is still quite a large amount of people.

  • Kokodude

    I hope Tesla wins out and I hope the American auto dealers start opening up their own dealerships and service centers.
    My Chevy Cruze has had a transmission issue since I bought it two years ago and yet it took me going to 6 Chevy dealers, across two states, for them to even admit there was a problem let alone figure out how to fix it.
    I live in San Jose and many of my colleagues at work own Teslas. They are fantastic cars and what’s better is that Tesla constantly adds features and upgrades to their cars for free. The cars are basically well designed software applications on wheels.
    I personally don’t think this is really a Republican vs Democrat issue. Most devices these days are simply containers for the software we want to use in our daily lives. Cars will soon join those ranks and Gov Snyder should take note of this fact.

    • Pbhead

      Its a “free market” vs “more regulation” issue. (or, ‘free market’ vs ‘union’, since it is a union which pushed this bill) Which, while not explicitly so, does tend to be the general stances of ‘republican vs democrat’.

      • Kokodude

        I agree with you on the diverging economic viewpoints of the two parties although I see the debate as free market vs tight regulation.
        What I was trying to say was that in this case the debate is pointless.
        The changes in technology will help usurp the current car dealer franchise model. As I mentioned in my last post Teslas are basically software on wheels.
        Unions can still build the cars but the distribution model will have to change eventually.
        By the way, from the economic viewpoint Democrats dislike unions as much as Republicans. Here in Silicon Valley the big tech companies are doing a good job at keeping them out of their businesses. These companies are all run by big time Democrats.

        • Pbhead

          I am fairly sure that all businesses, owned by whomever, do not like unions, but if a union does exist, the union inevitably donates to democratic politicians, who inevitably helps pass laws which help that union to survive.

    • pgm554

      @$80K ,they should be OK.

  • LorinT

    One claim of the dealerships is that they add value by servicing the vehicles that they sell.

    That sounds good in writing — but the fact is that such shoddy American-built vehicles will desperately need servicing over the maybe 100K miles they can be driven, so patrons of the big 3 are forced to shell out significant $$ over the lifetime of the vehicle.

    Amazingly, electric vehicles need very little servicing over the course of their life. A battery replacement every 200K miles or so, and that’s it. Plus, that battery is recyclable. The lithium inside gets re-used. Electrics are absolutely the way to go. Especially if they are charged from nuclear or renewable sources, they’re insanely good for the environment, and for our pocketbooks.

    • William Kitchen

      “shoddy American-built vehicles will desperately need servicing over the maybe 100K miles they can be driven”

      Where’d you pull that “100K” number from? My 1986 GMC van went 220K. Granted, it took some major repairs to keeping it going that long, but even with pretty lax maintenance it made it to 160K before needing anything big, which is not at all exceptional for American cars from that era, and more modern ones tend to do even better. 200K+ is now common. Your claim is false and absurd. You should be ashamed of yourself for making it.

    • Mikeq

      I disagree, my last three American make vehicles all gave exemplary service over their expected lifetime. All went over 200k miles with no issues.

      Research the “carbon cost” of your electric vehicles as well

  • rokidtoo

    Crony capitalism at its finest. However, to be fair, every state in the union supports these anti-competitive laws that hurt their constituents. Why? Because, car dealerships are state politicians’ biggest campaign donors.

    Finally, why do you think Warren Buffet is buying into a nationwide car dealership network? The answer: easy money, little risk, little competition, and compliant politicians. There’s money to be made in that kind of business.

  • Scott

    “Fierce competition between local dealers in any given market drives down prices both in and across brands. While if a factory owned all of its stores, it could set prices and buyers would lose virtually all bargaining power.” – Except they could go to another “factory” and buy their car for cheaper, competition is still viable…lets make Apple sell its phones via a 3rd party, maybe that will increase their competitive pricing??? Nonsense..

  • Curt Oleski

    If they ban a business trying to help detroit then stop all funding and screw em . Tesla would bring jobs growth taxes ect…

  • MrSatyre

    Whatever happened to personal responsibility? Caveat emptor and so on? There is no rational reason to deny anyone or any company the right to sell their goods to the public so long as those goods are vetted through the same safety tests as anything else (food, insulation, water, drugs, automobiles). What’s the difference between a local furniture maker selling his goods directly to the public and a major furniture store chain that buys all of its goods from Asia and sells them at strip malls or industrial parks? Regardless of who you are buying from, you take personal responsibility by knowing that what you are buying could be defective or dangerous by misuse, and if that product turns out to be, then you take appropriate steps to remedy the situation. Are you telling us that an automobile manufacturer that sells its products through privately owned dealerships operates under different laws that protect consumers more than the automobile manufacturer that sells its products directly to consumers? If. That’s really true, then change the laws. But don’t impede a free market for any other reason.

    • hasanhh

      How many thousands of parts does a car have? (Quality control and design are the key concerns -unless this is ignored like at GM or Ford with Pintos or Chrysler with their transmissions) Back in the 70s, new cars were so bad the states passed “lemon laws” -where if you were sold a defective new car, you got a new one free. Then the Big Three did some things to improve their products.

  • Canyon MIke

    Simple. Tesla opens a demo center in Michigan, and a big dealership in Chicago, and offers free shipping. Stupid minds….stupid laws.

    • Mikeq

      The law also nixes the demo center

  • I live in a neighborhood with a lot of engineers, attorneys, architects, high ranking Navy officers and other Type A professionals in Southern California who can afford just about any kind of car they like. They are trading BMWs and Mercedes for Teslas like crazy. I see at least one every single day. It is likely the first American car many of them have ever owned. I’d love one but my super practical Hyundai will run another 200,000 miles, just like the Toyota with the 300,000 miles on the odometer in my driveway. And once that happens, maybe there will be an American car I consider worth buying. Michigan can try and put its state finger in the dike, but the water always finds its way out somehow.

  • Betty Eyer

    This certainly does not serve the consumer.

  • hasanhh

    The only thing Tesla does “wrong” is cut-out the middle-man/woman.
    Personally, I do not want a battery operated/powered vehicle, but Tesla is pushing the envelope and that is good.

  • Wayne Xides

    The idea of factory direct is misleading. Almost every aspect of a dealership is still involved. Lacking in the retail elements is a service center (which generates it’s own monies, often service is a better bankroll than the sales end of things), and interest accumulated on standing inventory. To say that the consumer is in a better position buying from a ‘retail outlet’ vs a dealership is ignoring the overhead and personnel that both businesses are inevitably responsible for. Currently the internet has made auto sales exceptionally transparent for new vehicles. You can find the cost to dealer for every make and model out there with a few good keywords. You will never be close to that information on a ‘retail outlet’. People just seem to hate dealers so much that they will rally behind Tesla as if they are in business not to make a profit.

  • NickKenda

    “Fierce competition between local dealers in any given market drives down prices both in and across brands. While if a factory owned all of its stores, it could set prices and buyers would lose virtually all bargaining power.” What utter nonsense. First of all, if the price is not right, consumers can always buy a car from another manufacturer. Second, the dealers are only driving down the middle-man price — which is an artificial, unnecessary cost to the consumer anyway. They are in a race to the bottom with each other to cut down their middle-man profits.. but this has nothing to with decreasing the actual base cost of the car. For every consumer that negotiates hard with the dealers to decrease the price, there will be three consumers that do not know how to haggle, do not want to haggle, or do not want to be abused by the dealers’ sales tactics, so they simply pay the high price. All the dealers do is spread out their middle-man price along the general population, based on how much a consumer negotiates with them. This has nothing to do with car quality or providing any sort of additional “service” to the consumer.

  • JWPicht

    It’s a horrible law. That car dealers can argue with a straight face that their control of the market creates “fierce competition between dealers” that “drives down prices both in and across brands” supports the common belief that car dealers are consummate liars. They want to protect consumers by promoting fierce competition that lowers their own prices? Really? That would make them different from every other businessperson that’s ever walked the planet.

    I’m not in the market for a Tesla until the range is greater and it takes less time to charge at a charging station, but it would be worth the hefty Tesla price tag to me to stick my thumb in the beady little eye of NADA.

  • 12345ME

    Who really have “consumer care”? The Dealer or Manufacturer?

  • ALZ

    The reason given by NASD clearly doesn’t hold water here. Competition comes from more carmakers competing with each other, not more dealers competing with each other, as car makers ultimately control the supply of cars. –View from an economist

  • 3_percent

    Republicans once again working hard for their campaign contributors to help ‘kick the ladder’ Americans tax payers funded for the innovators and up-coming businesses who are deservingly but not yet on top.