Tesla Continues to Butt Heads With Michigan Car Dealers


Tesla Tool in Michigan

Despite having a plant in the state, Tesla has been blocked from selling its cars directly to the people of Michigan. Again.

Last year, the Michigan legislature passed a new law making it crystal clear that Tesla was not welcome in The Great Lake State. Governor Rick Snyder, a man who knows which side his bread is buttered on, signed the bill about 10 seconds after it was enacted. Thanks to a very powerful franchise dealer association, Michigan has drawn a bright red line around itself proclaiming “No Tesla Allowed.” One suspects the Big Three automakers, all of whom have their corporate offices in Michigan, may have had something to do with this as well.

That legislation passed despite a plea from the Federal Trade Commission reminding law makers that competition is the essence of the capitalist model and that laws favoring a small group of private businessmen over the public interest are bad policy. The legislators promptly threw the letter in the trash and voted the way their most prominent campaign contributors told them to. Nothing unusual in that.

But Tesla Motors is not easily deterred. To that end, the company has been mounting a charm offensive within the state, offering key legislators and state officials test drives in its cars to educate them to the benefits of electric motoring. “There doesn’t seem to be much interest from not only the dealers, but manufacturers like GM that want to continue to shut us out of the market entirely,” said Jim Chen, Tesla’s vice president of regulatory affairs, in a recent phone interview with the Detroit News, Will Nicholas, Tesla’s government relations manager, told the newspaper, “We have the majority of next year to lobby, discuss and debate the merits of what we think is a co-existence of our business model in the state of Michigan.”

Terry Burns, executive vice president of the Michigan Automobile Dealers Association, says Tesla is welcome in Michigan … as long as they sell through franchise car dealers. Burns even identified many established dealers would be happy to work with it to help market its automobiles, thereby demonstrating he has missed the whole point of the Tesla sales model.

Even Roger Penske- a racing legend who knows a thing or two about the car business- has weighed in on the matter. “If you look over the history of automotive manufacturers who wanted to sell direct or own their own dealerships, it’s been a failure. Tesla should just put their arms around many of us who can represent the car, service the customer — and they could worry about other customers.”

Tesla is investing in Michigan, despite the cold shoulder it has gotten so far. It has 4 SuperCharger locations operating within the state and shows a proposed service center located near Detroit on its website. It also bought Riviera Tool Company earlier this year and renamed it Tesla Tool. “We’re an American company that is building cars in the United States that is using over 55 Michigan suppliers — that is spending over $120 million in parts and components from Michigan suppliers to build American-made cars. Why shouldn’t we be allowed to sell in Michigan?” asks Tesla’s Chen.

Tesla is a patient but formidable foe. The world of automobiles is changing rapidly, despite the desire by entrenched private interests to resist. Hopefully, Tesla will eventually win its battle with the Michigan legislature. The only question is: when?


Tesla Motors Manufacturing in Michigan


About the Author

I have been a car nut since the days when Rob Walker and Henry N. Manney, III graced the pages of Road & Track. Today, I use my trusty Miata for TSD rallies and occasional track days at Lime Rock and Watkins Glen. If it moves on wheels, I’m interested in it. Please follow me on Google + and Twitter.

  • AaronD12

    “…many established dealers would be happy to work with it to help market its automobiles…”

    Therein lies the problem. Dealers are happy to work with it to help market its cars, but they don’t know how to. Even if Tesla taught them how to sell electric cars, they still wouldn’t. Why? ICE cars are more profitable, especially after the sale.

    • I’m not sure the “after the sale” part is entirely accurate? Even when we agree, we need to cite our sources. 😉

  • Dave Lecture

    Buttheads is right. It’s easier to sell a Tesla in China, than in Michigan. Ironic and sad.

    • super390

      That’s true about other issues too. The “entertainment” racket has imposed more and more software controls on music and movies to stop copying. The absurd Macrovision system was followed by the DVD region-coding system, and people who abhorred the problems they caused bought Chinese machines that did not include those protocols. These restrictions are loosely justified by America’s draconian Millenium Copyright Act. As Chinese manufacturers have entered the US market they have knuckled under to this IP tyranny.

  • Don Rexer

    Yep. Those major automakers probably think of themselves as ‘free-enterprise’ ‘capitalists’, but let’s face it… free enterprise depends on the failure of those who can’t make it on their own for the entry of new, innovative players who do very well by comparison. Major, huge bailouts of those Goliaths by the lowly taxpayer was a socialist move. And using their waning political influence to ban competition… that’s actually more like communism.

    When people get desperate enough, all the old principles go out the window. We hear how they can defeat Tesla with their enormous engineering prowess – apparently not: all they are using is lawyers.

    • super390

      Well, when private property owners engage in oppressive acts, it’s more like fascism. Or at least the owners will bankroll the fascists as a last resort.
      And America hasn’t beaten anyone with its engineering prowess in a long time. Like many aging empires, we have become specialists in financial engineering.

    • They don’t think in terms of enterprise (free or otherwise), and there is no ideology involved. It’s strictly a cash grab … by Elon Musk, too.

  • super390

    “Service the customer.” That’s what I’m afraid of.

  • Rob Zwald

    I haven’t read the phrase “corruption of public officials.” Perhaps it’s too obvious.

    • Steve Hanley

      I think it is implied by this sentence, Rob. ; – )

      “The legislators promptly threw the letter in the trash and voted the way their most prominent campaign contributors told them to.”

  • A_T_T

    Well. Just place Tesla stores on the border of Michigan.

  • Austin, that’s just not true. You’re missing a whole lot- as is Forbes, probably. Go spend a few years working in a dealership and you’ll see what the hierarchy really is.