Don't look for a Tesla store in Detroit anytime soon. Even though the company says a Motor City service center is "Coming Soon," another hurdle was placed in the company's way today when Governor Rick Snyder signed House Bill 5606 into law. The law was introduced by State Representative Aric Nesbitt, who said it is not "anti-Tesla at all." Still, 5606 does clarify and strengthen the state's laws against an automaker selling vehicles directly to consumers, which is why Tesla called on its supporters last week to ask Snyder not to sign the bill into law. That didn't work.
The bill passed the Michigan legislative chambers with overwhelming support last week (106-1 in the House, 38-0 in the Senate) and Snyder said that his team's research found it "doesn't change current law at all." He nonetheless thought it was worth signing, and you can watch him explain why in the video below. He also mentions a letter he attached to the bill saying he's open to future discussions regarding direct vehicle sales. He does not mention his campaign support from numerous auto dealers.
We have asked Tesla for a comment on this latest development and will let you know when we hear back. Last week, the California automaker called the legislation "harmful to consumers."
Calls for healthy, open discussion on potential changes to business model; also signs one other bill into law
Tuesday, Oct. 21, 2014
LANSING, Mich. – Gov. Rick Snyder today signed bipartisan legislation that clarifies and strengthens an existing law about direct auto sales in Michigan.
House Bill 5606, sponsored by state Rep. Aric Nesbitt, also prohibits auto manufacturers from dictating fees franchised dealers can charge customers. The legislation allows individual auto dealers to make the business decision whether to charge the transaction fee.
The bill was approved by 38-0 in the state Senate, and 106-1 in the state House of Representatives.
Snyder said Tuesday there has been a misunderstanding about the legislation.
"This bill does not, as some have claimed, prevent auto manufacturers from selling automobiles directly to consumers at retail in Michigan – because this is already prohibited under Michigan law," Snyder said in a letter to lawmakers that accompanies the signed bill.
Language in the bill states plainly that a manufacturer can only sell new vehicles to consumers through its own network of franchised dealers. HB 5606 deletes the word "its" from a sentence in existing law.
This change would merely allow manufacturers who do not have their own franchised dealers to sell through another manufacturer's network of franchised dealers. They will be required, just as they are now, to sell through a franchised dealer, and not directly to consumers. HB 5606 does nothing to change this fact. At most, it clarifies the existing requirement in Michigan law.
Snyder requested Attorney General Bill Schuette analyze the effect of the bill, and the Attorney General's Office also concluded that auto manufacturers could sell only through franchised dealers, as is the case in existing law.
Snyder said lawmakers can and should discuss the current business model soon to determine if it is best for the state's consumers.
"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," he said.
The bill is now Public Act 354 of 2014.
The governor also signed HB 5273, sponsored by state Rep. Nancy Jenkins which connects small businesses with funding opportunities by creating Michigan Investment Markets, which operate as intrastate broker-dealers. The law connects Michigan businesses and residents, allowing for stock in local businesses to be bought, sold and traded.
The legislation is an extension of the crowdfunding measure enacted in 2013, allowing companies to use crowdfunding to raise money for their business. It is now PA 355.
For more information, visit legislature.michigan.gov.
Statement on GM Support of Michigan House Bill 5606
DETROIT – The following statement is attributable to a GM spokesperson:
"General Motors applauds Governor Snyder's signing of HB 5606. This will provide stability and support for our dealers, who are focused on delivering a world-class sales and service experience for our customers. Further, it will ensure we compete under the same rules in the marketplace as other automobile manufacturers."
General Motors Co. (NYSE:GM, TSX: GMM) and its partners produce vehicles in 30 countries, and the company has leadership positions in the world's largest and fastest-growing automotive markets. GM, its subsidiaries and joint venture entities sell vehicles under the Chevrolet, Cadillac, Baojun, Buick, GMC, Holden, Jiefang, Opel, Vauxhall and Wuling brands. More information on the company and its subsidiaries, including OnStar, a global leader in vehicle safety, security and information services, can be found at http://www.gm.com