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Michigan Gov. Rick Snyder officially bans sales of Tesla

"This is an embarrassment for the State of Michigan and democracy," says Michigan-area legal expert.

By Matt Bradwell
Michigan Gov. Rick Snyder officially bans sales of Tesla
Tesla's Model S. (Credit:Tesla)

LANSING, Mich., Oct. 21 (UPI) -- Michigan Gov. Rick Snyder signed into law Tuesday a bill banning direct manufacturer auto-sales, effectively criminalizing electric car company Tesla's entire sales model within the U.S. automotive hub.

As UPI reported on Oct. 17, similar legislative action was proposed or already in place in Georgia, Missouri, New Jersey, New York, Ohio and Pennsylvania -- but in each of those cases, Tesla was able to work with lawmakers to reach a compromise, allowing the electric automaker to pursue its direct-to-customer boutique approach to sales.

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At the time, Tesla CEO Elon Musk described the then-proposed legislation a "raw deal." Tesla has repeatedly stated that because it's a low-volume manufacturer, the dealership model does not make sense for them.

"What's good for GM's customers is not necessarily good for Tesla's customers," the automaker said Tuesday in an uncharacteristically subdued and politically correct statement following a setback.

"What's good for gasoline cars is not necessarily good for electric cars. Tesla is selling a new product with a new technology. The evidence is overwhelming that a traditional dealer-based approach does not work for electric cars. Moreover, GM distorts the purpose of the franchise laws (including in Michigan), which are in place not to cement a monopoly for franchised dealers but rather to prevent companies with existing franchises from unfairly competing against them. Tesla has never used franchised dealers, so these concerns are simply irrelevant."

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University of Michigan law professor Daniel Crane was much less generous in his analysis of Nixon's decision to sign the bill.

"This is an embarrassment for the State of Michigan and democracy," Crane told the Detroit Free-Press.

"When no one was looking, the car dealers slipped language into the bill that would strengthen their case against Tesla. They went to the Governor's office and told his staff they needed this change in order to avoid the result in Massachusetts, where the Supreme Court ruled against them and in favor of Tesla."

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