House approves bill letting Tesla sell, repair cars in Michigan

House approves bill letting Tesla sell, repair cars in Michigan

Beth LeBlanc |The Detroit News| 12/02/2020

The Michigan House on Wednesday passed a bill that would exempt California-based electric automaker Tesla from some elements of a state ban on direct vehicle sales.

The changes that the House approved in a 65-39 vote would enshrine in law the terms of an agreement between the state and electric car company Tesla Inc., which challenged the state’s ban on direct sales in 2016. Michigan’s ban on direct sales requires companies to sell cars through franchises — as Detroit’s automakers do — instead of directly to consumers.

In January, the state settled with Tesla and allowed it to sell cars to Michigan customers if the sale, on paper,took place outside the state. It allowed Tesla Michigan, a subsidiary, to own and operate service and repair facilities in the state.

The legislation approved Wednesday enshrined those elements of the agreement.

It also lets Tesla deliver vehicles to Michigan through an independent carrier. The legislation allows Tesla to operate facilities that offer demonstration drives, discuss prices, educate people on how to buy a vehicle, and facilitate the order and purchase of a vehicle outside. Sales paperwork must indicate the sale took place outside of Michigan.

Bill sponsor Rep. Jason Sheppard, R-Temperance, was not immediately available for comment.

House Minority Leader Christine Greig, D-Farmington Hills, attempted to offer a substitute to House Bill 6233 on the floor Wednesday that was adopted before it was voted on a second time and failed.

Greig said her substitute would offer a limited number of licenses that could be used by companies other than Tesla. She said the current legislation did nothing to solve the underlying issues with the state law that prompted the litigation.

“It does not solve the problem that we have with the lawsuit with Tesla,” Greig said. “It opens up the state to additional litigation, which costs taxpayer dollars. And it also is a very anti-market approach to vehicle sales.”

Tesla had been barred from direct sales or vehicle service in Michigan directly to customers since October 2014, when Republican former Gov. Rick Snyder signed a bill into law that he said “clarifies and strengthens” an existing statute that prohibited direct sales of new cars to protect dealers.

General Motors Co. and Ford Motor Co. supported the so-called “anti-Tesla” bill that was initiated by the Michigan Automobile Dealers Association, legislation that state officials insisted was not anti-Tesla.

Prior to the January agreement allowing Tesla to make direct sales to Michigan customers, Tesla owners had to go to Cleveland, Columbus, Toledo or Chicago to purchase or receive service. And the company’s galleries in places like Troy’s Somerset Collection were barred from assisting in any sales, test drives, price discussions or paperwork.