Tesla: Michigan lawmakers join Texas, other states protecting auto dealerships

Enlarge Photo

Daniel Acker

Tesla Motors says legislators in Michigan and other states are passing anti-competitive laws to protect old fashioned automobile dealers who are threatened by Tesla's direct-to-consumer, no price-haggling sales methods.

Patrick Hoge

Reporter- San Francisco Business Times

Email  |  Google+  |  Twitter  |  LinkedIn

Tesla Motors (NASDAQ: TSLA) is crying foul in Michigan, one of multiple states its says has taken action to protect old fashioned auto dealers from the expanding electric automobile maker. Texas is one of those states.

Namely, state lawmakers in Michigan and other areas are passing anti-competitive legislation aimed at blocking Tesla's disruptive direct-to-consumer, no price-haggling sales method.

The Palo Alto maker of electric automobiles posted a blog Thursday night urging voters to demand that Governor Rick Snyder veto HB5606. It it laid blame for a bill amendment that targets Tesla at the feet of the Michigan Automobile Dealers Association and Republican Senator Joe Hune. Hune is a beneficiary of the association's campaign and his wife works for a lobbying firm that has represented the association.

A spokesman for Snyder, a Republican, said the governor was still reviewing the bill and was expected to release a decision on Oct. 21.

The legislation would "create an effective prohibition against Tesla opening a store in Michigan" and "seeks to prevent Tesla from operating a gallery in Michigan that simply provides information without conducting sales," Tesla wrote.

"We could even be barred from telling people about our car," Tesla said.

Tesla's direct sales approach represents an existential threat to automobile dealerships, which have backed court, legislative and regulatory attempts to frustrate Tesla with, mixed results.

In September, the Massachusetts Supreme Judicial Court tossed a lawsuit filed by the Massachusetts State Automobile Dealers Association seeking to block Tesla's direct sales using a state law meant to protect franchise owners from car manufacturers.

Patrick Hoge covers technology for the San Francisco Business Times.