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Tesla goes on the offensive in Michigan, sues Gov Snyder over ban on direct sales

Interior of the Cleveland store as line filters in.

After months at a standstill at the Michigan Secretary of State office, Tesla’s application for a dealership license in order to service and sales its vehicles in the state was rejected earlier this month.

Electrek has learned today that Tesla filed a lawsuit against the state in order “to vindicate its rights under the United States Constitution to sell and service its critically-acclaimed, all-electric vehicles at Tesla-owned facilities in the State of Michigan”.

The court battle will be an important one for the electric automaker since Michigan is the most populated state in the US that still doesn’t have a Tesla store or service center.

The suit, which Electrek obtained and embedded below, was filed in the western district court of Michigan Southern division and it cites as defendants Secretary of State and Chief Motor Vehicle Administrator, Ruth Johnson, Michigan’s Attorney General, Bill Schuette, and Governor Rick Snyder.

Tesla is demanding a jury trial and to expedite the proceedings.

In 2014, Gov Snyder signed into law an amendment to “clarify” the position of the state in regards to automakers selling vehicles directly to customers without going through third-party dealerships. After strong lobbying from dealership associations and some automakers in Michigan, like GM, the amendment passed and effectively banned Tesla from establishing its own store and service facilities in the state, which it was about to do.

Tesla went ahead with its plans to open a store and service center in Detroit and applied for a dealership license anyway to test the new law. Now that it was officially rejected last week, Tesla went ahead and filed the suit.

In the suit, Tesla argues that the amendment, which it refers to as the “Anti-Tesla” amendment, “violates the Due Process, Equal Protection, and Commerce Clauses of the Constitution”.

The automaker seeks a permanent injunction preventing State officials from enforcing the relevant section of the law, which would force the state to issue Tesla a dealership license.

While Tesla faces similar issues with bans on direct sales in other states, like Texas for example, the ban in Michigan is particularly severe and even prohibits Tesla from performing service and maintenance on its vehicles in the state.

There are over 400 Tesla owners in Michigan and they have to travel to neighboring states to have their vehicle serviced. GM, who Tesla said lobbied for the ban in Michigan, even boasted about the fact that Tesla owners have difficulty getting service. GM CEO Mary Barra used it as a selling point for the Bolt EV.

In the lawsuit, Tesla highlights allegations of strong lobbying efforts from GM and dealerships on the state government for the clear adoption of the ban on direct sales in order to block Tesla. The automaker also explains in details the reasons behind its refusal to sell its vehicles through the third-party dealership model.

You can read the suit in full here:

[scribd id=324910801 key=key-mQQMMA1TRqT27LdvEhnT mode=scroll]

Featured Image: Interior of the Tesla Cleveland store as line filters in on March 31, 2016 – the first day of Model 3 reservation – by Jon Jivan.

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