Group Seeks to Press Tesla Sales Issue in Lansing

Under current law, direct-to-consumer sales of motor vehicles are prohibited in Michigan. According to the staff of the Federal Trade Commission, the law, dubbed the "anti-Tesla law" by some, is anti-competitive. Gov. Rick Snyder has said he would welcome a debate on the issue, and a new coalition has entered the fray.

A group called the Freedom to Buy coalition is pressing for that debate.

“We’re going to be having some conversations with folks,” said Jeff Timmer, the group's spokesman. “We’re going to be talking about this law and what’s going on. The governor has said that he’d like to see the Legislature have this discussion.”

The Tesla issue also came up in the previous Legislature. During autumn 2014, Tesla’s challenges selling in Michigan attracted attention after language was inserted into House Bill 5606 that said manufacturers could not “sell any new motor vehicle directly to a retail customer other than through franchised dealers, unless the retail customer is a nonprofit organization or a federal, state, or local government or agency.” Before this amendment was inserted, the bill had been a measure about an unrelated issue concerning the fees auto dealerships charge for preparing documents.

Tesla publicly asked Snyder to veto the bill. Other parties, including some elements of the news media, called for a veto as well. But after asking Attorney General Bill Schuette for a legal opinion, Snyder said Michigan law already prohibited direct-to-consumer sales of motor vehicles, regardless of whether he signed House Bill 5606.

Snyder did sign the bill and attached a letter in which he said he welcomed a “healthy, open discussion” on whether the state should end the prohibition.

The letter stated: “This discussion should consider, first and foremost, what is best for Michigan consumers, for expanding economic activity, and for innovation in our state. We should always be willing to re-examine our business and regulatory practices with an eye toward improving the customer experience for our citizens and doing things in a more efficient and less costly fashion. I urge the Legislature to engage in this discussion and to make it a top priority in its next session.”

Then in early 2015, Sen. Darwin Booher, R-Evart, asked the FTC for input on a separate but related issue involving autocycle manufacturers. In its response, the FTC staff asked Michigan lawmakers to consider repealing the state’s ban on direct-to-consumer sales of motor vehicles.

“In our view, current provisions operate as a special protection for dealers — a protection that is likely harming both competition and consumers,” the response read. It also noted that the staff's “principal observation is that consumers are the ones best situated to choose for themselves both the vehicles they want to buy and how they want to buy them.”

The Auto Dealers of Michigan strongly supports the anti-Tesla law. This group is generally considered to have a very active and influential lobbying presence at the Capitol. Kurt Berryman, director of legislative affairs for the dealers' group, has not responded to a phone call and an email offering him the opportunity to comment.