Michigan governor signs law that Tesla says bans direct sales model

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Daniel Acker

Tesla Motors objects to laws like one in Michigan that require auto manufacturers to sell to consumers through dealerships.

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Patrick Hoge

Reporter- San Francisco Business Times

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Michigan Gov. Rick Snyder signed a law Tuesday tightening a ban on direct sales of news cars, the latest in what Tesla (NASDAQ: TSLA) says are similar rules in states its says are protecting old fashioned auto dealers from the expanding electric automobile maker.

It says 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.

Tesla, the Palo Alto maker of electric automobiles, recently posted a blog urging voters to demand that Snyder veto HB5606, which it said catered to the Michigan Automobile Dealers Association.

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.

Snyder, however, issued a statement saying the legislation "clarifies and strengthens an existing law about direct auto sales in Michigan," which already prevents auto manufacturers from selling automobiles directly to consumers in the state.

As to the future, Snyder said lawmakers "can and should discuss the current business model soon to determine if it is best for the state's consumers."

Patrick Hoge covers technology for the San Francisco Business Times.