US: Tesla gets sales ban in Michigan image

The state, home to the three biggest US automakers, has enforced a law that banns Tesla’s direct sales practice, the fifth state in America to do so, in the latest blow dealt to the California-based automaker over its war with US dealers.

Michigan’s Governor, Rick Snyder, decided to sign a bill passed by the state’s legislature, effectively ruling out the possibility for Tesla to keep its privately-owned stores and internet sales practice. Traditionally, US carmakers need to use a franchised dealership system to sell their cars domestically.

Snyder explained his decision in a letter to members of the state House of Representatives, claiming the new bill simply “clarifies” the laws already in place that ban direct manufacturer-to-consumer retail sales. He added that car sales must be made only through the traditional franchised dealer system.

According to Tesla, the other states that don’t allow the electric car manufacturer to sell its Model S sedan to customers directly are Texas, New Jersey, Arizona and Maryland. There, the automaker only has “galleries”, places where prospective clients can view the car but don’t have the usual package: price discussions, test-drives or issue car orders. The Michigan law also bans these informational venues.

Diarmuid O’Connell, Tesla vice president of business development, and general counsel Todd Maron said they had hopes for a change of heart, as Snyder, in his letter to state legislators, left the possibility open: “A healthy, open discussion can and should be had over whether the current business model in Michigan should be changed.”

Via Reuters