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Tesla loophole for direct sales in Michigan is getting shut with impressive political backstabbing

After years of fighting, Tesla thought it was safe from Michigan’s latest effort to prevent car dealers from having competition from new automakers, but now we learn that the state legislature is trying to shut Tesla’s legal loophole.

Michigan has been a battleground for Tesla when it comes to the right to sell and service its vehicles.

There are several states where Tesla has been banned from selling its vehicles directly to customers due to misused old laws meant to protect car dealers against their own automakers, and Michigan has stood out among them, as it’s the home of the US auto industry.

A change to the law in 2014 prohibited direct sales from automakers that blocked Tesla from obtaining a dealership license and selling cars in the state.

After legislature tried to change things in 2016, Tesla filed a lawsuit against the state, claiming that the ban on direct sales violates commerce laws, and that it was pushed by car dealers and GM in an attempt to block the electric automaker at the last hour.

It has since been a long legal process during which Tesla tried to prove that lawmakers were influenced by car dealers to specifically prevent Tesla to sell vehicles direct to consumers in the state.

Earlier this year, Tesla reached a settlement with the state of Michigan to allow direct sales and service of vehicles. Michigan didn’t officially allow Tesla to get a dealer license, but it is allowing Tesla to sell to and service customers’ cars in Michigan through legal loopholes, like registering cars from another state for deliveries and having a wholly owned subsidiary perform services.

Earlier this year, Electrek reported that the state legislature introduced a new bill that would make sure no other new automaker would get access to that loophole.

The new legislation was introduced after Rivian was looking to set up its own sale and service operations in the state.

At the time, even the Michigan Auto Dealer Association (MADA), who were unsurprisingly backing the bill, said that Tesla wouldn’t be affected by the new legislation.

Terry Burns, executive vice president of MADA, says that the agreement with Tesla didn’t change the law, and the new bill is clarifying that:

That settlement was based on a clear set of specific facts for a specific time.

However, we now learn that the language of the bill was changed at the last minute before it was approved by Michigan’s house.

Detroit News reports:

House lawmakers on Wednesday struck key language from a bill that would have enshrined a carveout for Tesla in Michigan’s ban on direct vehicle sales. Instead, lawmakers passed a bill 65-39 that appears to counteract Tesla’s January settlement with the state by banning vehicle manufacturers from directly or indirectly owning a motor vehicle repair or service center.

The new bill still needs to pass the state senate and be signed by the governor, but if it goes through, it could reverse the loophole put in place as part of Tesla’s settlement with the state.

Tesla opened a service center near Detroit earlier this year following the agreement.

Electrek’s Take

Let me get this straight.

Michigan passed a questionable law preventing Tesla from operating its sale and service centers in the state. Tesla tries to challenge the law at the legislative level, but it gets shut down by politicians who appear to be in the pockets of car dealers.

Then Tesla instead takes Secretary of State and Chief Motor Vehicle Administrator, Ruth Johnson, Michigan’s Attorney General, Bill Schuette, and now former governor Rick Snyder to court over the issue.

These bozos don’t like the heat and decide to settle with an official loophole allowing Tesla to operate.

A few months later, the legislature decides to close the loophole — basically invalidating the result of a three-year-long lawsuit.

This is nonsense, and I can’t imagine that it’s not the result of the US’ massive problem of money in politics.

There’s no other reason to support these kinds of laws other than wanting to play nice with car dealers, who are notoriously big financial supporters in politics at the state level.

Tesla, Rivian, Lucid, and any other automakers who never benefited from third-party franchise dealers investing in building a distribution network for them should of course be allowed to build their own distribution and service network and not be forced to work with third-party car dealers.

There’s no good argument against that.

Michiganders, if I were you, I’d vote out of office all of those politicians who are voting for this new bill — starting with Representative Jason Sheppard, (R-Temperance) who sponsored the bill. I am trying to find a list of the of the 65 house representatives, people who claim to be representing you, who voted for it. I’ll add if/when I find it.

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