Tesla Unable To Sell Direct To Customers In Michigan

Tesla has been dealt a major blow in their quest to sell direct to customers. Michigan Governor Rick Snyder is set to sign legislation that will make it impossible for auto manufacturers to sell direct to customers. Tesla has long-held the position that it's best for the consumer if they buy direct from Tesla, with the company opening several showrooms across the country. At least in Michigan, Tesla is going to have to try the same route other auto companies make use of.

The bill, according to Snyder, is meant to let Tesla sell via other dealerships in the state. It's worth noting that in the state of Michigan, no auto manufacturer can sell directly to customers. All auto companies must sell via a franchised dealerships.

Tesla, to their credit, wanted to take the fight to the public forum. Selling direct to customers is their aim, and they were open to a public forum on the discussion surrounding why it's currently not legal in some states to do so. According to Tesla's VP of Business Development, Diarmuid O'Connell, "This was the latest manifestation of a dealer association trying to avoid public debate of this issue by moving through back channels to evade public scrutiny".

The National Automobile Dealers Association says "Fierce competition between local dealers in any given market drives down prices both in and across brands. If a factory owned all of its stores, it could set prices, and buyers would lose virtually all bargaining power."

I don't know about you, but I read that statement from the NADA as "we want our cut".

The bill in Michigan could prove more troublesome for Tesla in the near future. They've already faced direct-sales issues in other states like New Jersey.

Though Tesla is typically able to find a common ground with state legislators, Michigan doesn't seem interested in that, or willing to bend current laws to make it happen. These are tricky waters for Tesla to navigate, and this ruling only complicates matters moving forward.

Via: Bloomberg