Governor Snyder signs a law to ban Tesla direct sales in Michigan

http://www.wxyz.com/news/state/governor-snyder-signs-a-law-to-ban-tesla-direct-sales

63 55 12 years ago

sbenario• 12 years ago

Another example of regulation being used to protect older, more established businesses from newer entrants that would supplant them.

Sigh.

ende• 12 years ago

Reglation, corruption, lobbying... Its all the same thing.

mandeepj3• 12 years ago

What is his problem? I think they are all trying every-possible-trick-under-their-belly to slow down the storm called TESLA. The day TESLA becomes mainstream the mafia of car dealers, oil rigs will go down the drain. NO MORE OIL.

_acme• 12 years ago

You do understand that electricity is still needed to charge these cars, right, and that a lot of that energy comes from oil (or worse, coal).

MCRed3• 12 years ago

When I was a kid, I saw the movie Logans Run (1970s). They made it to washington DC and found a car. They didn't know what it was, but they shined a light on it, and it started to activate and so they conclduded "maybe this thing is powered by the sun"... and it was.

Well, it's been 40 years since that movie was made. Alas, a solar powered car may still be many years off... but the elegance of it is certainly extremely appealing.

One problem: I love the Tesla's expansive sunroof. Would want solar collectors that are at least semi-transparent to light.

beastman82• 12 years ago

or better, nuclear

mandeepj3• 12 years ago

We can call it (Tesla) incremental departure from oil. Down the line, we might be able to charge tesla under lot lesser time than what it takes today. May be we will have solar tesla or self charging tesla.

At least, these constant rip-offs of every n month this fluid change will go away.

scott_karana• 12 years ago

It might be a minor improvement, but it's still an improvement.

Oil burned in a plant is higher efficiency than when burned in individual, smaller-scale engines.

Stated as a corollary: imagine how dirty having per-car coal furnaces would be...

the_ancient• 12 years ago

Name one "oil" fired power plant?

Coal yes, nat gas sure, hyrdo (which is where alot of MI power comes from) you bet yea but I have not seen a oil powered electric plant.

further even is such a thing does exist, generating electricity has a much high efficiency then the IC engine which is by for one of the least efficient systems there is

MCRed3• 12 years ago

I believe that this law is in direct violation of the commerce clause[1]. The commerce clause was designed to prevent tarrifs from being placed on products from one state being sold in another state. They wanted to prevent inter-state trade wars. Being forced to go thru a dealer network that (theoretically) adds no value while extracting a cut of sales is a form of a tarrif (or at least, I think it is arguably one).

Therefore, I think it might be time for Tesla to take this up as a federal matter.

I believe Tesla's constitutional rights are being violated in the states that do not allow them to operate their own stores.[2]

[1] "Congress shall have the power to regulate commerce ... among the several states ..." At the time the constitution was written, the definition of regulate was something like "to keep free of obstruction, to allow to occur without hinderance".

[2] This is completely separate from regulations that require car stores to operate safely, e.g.: if the state required that service departments have barriers around pits to keep people from falling in, that would be fine, and Tesla could comply when they open a service department. But forcing a business model on people is quite different from protecting public safety.

baddox4• 12 years ago

This wouldn't be a violation of the commerce clause per se. The commerce clause just says that the federal government has the authority to regulate interstate commerce. In other words, the US legislature could pass a law prohibiting these restrictions on Tesla sales, and that law would be constitutional.

abcabc321321123• 12 years ago

The commerce clause just says that the federal government has the authority to regulate interstate commerce.

This is not completely correct. Let me expand a little bit even though it is not applicable here. There is something called the "dormant" commerce clause (also referred to as the "negative" commerce clause) doctrine. This doctrine basically prohibits states from favoring in state commercial actors at the expense of out of state actors. Think protectionist legislation. Therefore, there is a lot more to the commerce clause than simply allowing the federal government to regulate interstate commerce.

ctdonath4• 12 years ago

"Regulate interstate commerce" was sent to hallucinogenic new levels with the Supreme Court ruling in the Raich case. TL;DR - feds can "regulate" (via SWAT-type police raid) a terminally ill old lady's doctor-prescribed-and-monitored state-legal for-personal-use-only marijuana plants because her doing so decreased demand in an illegal interstate market.

abtinf• 12 years ago

Michigan is not discriminating against Tesla. They are not saying "only Tesla may not sell direct to consumer." Instead, they are saying "No auto manufacturer, regardless of their state, may sell direct to consumer." Thus, no commerce clause violation.

gknoy• 12 years ago

What would stop Musk from making a company whose sole purpose was to be a Tesla dealership? It would buy cars from Tesla, sell to consumers, and sell Service Arrangements with Tesla, etc.

mandeepj3• 12 years ago

Michigan is not discriminating against Tesla. They are not saying "only Tesla may not sell direct to consumer."

I think they took the safest approach

drivingmenuts• 12 years ago

http://www.engadget.com/2014/07/17/tesla-motors-us-sales/

Decent article summarizing why Tesla can't sell directly.

TLDR: Because auto dealers don't want to have to compete directly with manufacturers.

Which makes no sense, seeing as how Tesla doesn't have any dealers that would compete with them, selling their own cars.

I like the guy I bought my car from on one level, but if it saves me money on my next car purchase, well, so long dealerships.

toomuchtodo• 12 years ago

So Michigan could legislate that any business is not permitted to sell directly to consumers. Great state to live in.

bmh_ca• 12 years ago

The commerce clause may be violated if the effect is discrimination.

"It is the effect upon commerce, not the source of the injury, which is the criterion." - N.L.R.B. v. JONES & LAUGHLIN STEEL CORP., 301 U.S. 1 (1937) [http://laws.findlaw.com/us/301/1.html]

duaneb2• 12 years ago

How are these people justifying these changes to their constituents? It's pretty hard to justify mucking with the free markets except to protected vested interests. Most of the time, these vested interests have very little to do with the voters.

pavel_lishin• 12 years ago

I'd wager that in Michigan, a large part of the constituency works for non-Tesla car manufacturers. They might be just fine with it.

duaneb2• 12 years ago

I still think they would be more convincing attempting to get Tesla to sell to dealerships (lol) or to attempt to get Tesla to move some of the manufacturing to Detroit. I can't see this being positive for the taxpayers of Michigan for more than a few years.

baddox4• 12 years ago

I think you underestimate the brazenness with which politicians can approach these issues. George W. Bush practically boasted that he had deliberately abandoned free market principles. You might be overestimating how much love people have for the free market as they understand it.

BHSPitMonkey• 12 years ago

They "justify" it by claiming that direct sales would threaten the jobs of the dealer industry, not that it actually justifies anything. By that reasoning, we should not have allowed manufacturing to become mechanized, because "think of the factory workers!".

dkrich2• 12 years ago

No justification is required because it's pretty much baked into the mentality of the Midwest. The auto industry is what drives the Michigan economy (at least its most populous areas). Therefore most constituents not only don't mind, but likely fervently support such laws. The same could be said for the United Auto Workers. Pretty much the opposite of the free market, yet most people in Michigan support it because either they or somebody they know relies on the benefits created by the union.

Further, few people in Michigan can afford a new Ford, let alone a $60,000 electric car. If Tesla wants to lobby for free market economics, Michigan is probably the very last state they should be trying to convince.

andykellr• 12 years ago

Your generalizations about Michigan are misinformed.

There are many people in Michigan that think that companies that sell things should be able to sell them to people that want to buy them. There are also many people that can afford a Tesla.

piyush_soni• 12 years ago

In the country I come from, corruption is rampant, and it makes governments create anti-public, pro-corporations laws and regulations. But there it's still called "corruption". Here, in US, it is called "Lobbying", and is official.

MCRed3• 12 years ago

I call it corruption as well. Any time the government violates its own laws, or violates human rights, that's corrupt.

I think americans believe their government is less corrupt in part because corruption is not identified as such.

Illegal domestic spying is corrupt, and a crime... yet no charges have been filed (for instance). This matter here, is possibly in an area where the law isn't as settled, so corruption is an opinion, rather than a fact, but an opinion I would agree with.

yock• 12 years ago

Snyder gets a lot of money from Ford, GM, et. al.

The United Auto Workers gave the DGA about $1 million, according to MCFN. The union was the largest donor from Michigan, followed by the Service Employees International Union, the Michigan Regional Council of Carpenters, Ford Motor Company and Caidan Management. http://www.mlive.com/lansing-news/index.ssf/2014/10/michigan...

mark-r3• 12 years ago

Does this really surprise anybody? Remember which state Detroit is in?

numo16• 12 years ago

This also blocks GM/Ford/Chrysler from selling directly to the consumer. This isn't specifically Tesla focused, but is favoring the auto dealer network which wants to remain relevant and get their cut.

TaylorAlexander• 12 years ago

Since only Tesla actually wants to sell direct (and in fact needs to due to the unique nature of their product), this does in effect only target Tesla. It just doesn't look so targeted to the layperson, which is likely why they can get away with this.

mark-r3• 12 years ago

GM/Ford/Chrysler have a symbiotic relationship with their dealers - they both need each other to survive. Neither wants to see a new upstart that might someday eat their lunch.

Presumably if the makers had a do-over, they might try direct to the consumer themselves, but the present conditions make that impossible.

Falkon1313• 12 years ago

Can craftsmen and other non-auto manufacturers sell directly in Michigan, or are they also forced to hire distributors and retailers? What crime is that law supposed to prevent?

padobson• 12 years ago

Anybody want to start a Tesla dealership in Dearborn?

rabbyte• 12 years ago

Couldn't somebody open a dealership that offers Tesla vehicles where dealers are replaced with touch screens that walk you through all the available options, scheduling test drives, and settling on payment? Staff would be there to make sure questions are answered, machines are operating properly, and verifying paperwork. I know nothing about this industry so I could be totally off base but that seems like a decent way to jab back at an aging system.

jinushaun• 12 years ago

That's how Tesla stores currently work. But those stores are illegal too.

Governor Snyder signs a law to ban Tesla direct sales in Michigan

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