Tesla Applies For Dealership License In Michigan (Update)

2 years ago by Eric Loveday 54

Tesla Store

Tesla Store

Tesla Model X and Model S side by side

Tesla Model X and Model S side by side

The state of Michigan does not allow the direct sales of automobiles by automakers like Tesla Motors, but that hasn’t stopped Tesla from taking the first step by applying for a Class A dealership license in the state of Michigan.

If approved, Michigan would soon become home to Tesla first dealership.

Detroit News believes that Tesla could then choose to have the store opened by anyone other than Tesla the corporation itself (insert name of anyone with Tesla’s own best interest at heart here), or, in other words, a typical franchise scenario in the state of Michigan – but still run exactly like every other Tesla operation.  Call it a creative workaround.

Update: Tesla has released a statement clarifying its intention with the dealership application

“As recently amended, current Michigan law prohibits Tesla from being able to license its own sales and service operations in the state. Submission of the application is intended to seek the Secretary of State’s confirmation of this prohibition.

Once confirmed, Tesla will review any options available to the Company to overturn this anti-consumer law.”

According to the Detroit News on the filing:

“Tesla Motors Inc. has applied for licenses to sell and service its luxury electric vehicles in Michigan, even though Gov. Rick Snyder signed legislation in late 2014 that bans the company’s business model of directly selling cars to customers.”

“The Palo Alto, California-based automaker submitted applications in November to the Michigan Secretary of State Office, and submitted follow-up information in recent weeks.”

Secretary of State spokesman Fred Woodham says that a decision on Tesla’s application will be made with the next couple of months. He wouldn’t comment on what the hold up is.

If approved, Tesla would have to establish a dealership with a connected repair facility or would have to contract repairs to a licensed facility with which it has a relationship.

If denied, Tesla will likely return to battling the state’s direct sales ban.

Tesla did not respond to the Detroit News’ request for comment on the situation

Source: Detroit News

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54 responses to "Tesla Applies For Dealership License In Michigan (Update)"

  1. kdawg says:

    If the dealership has to be run by someone other than Tesla, shouldn’t this other company have to apply for the dealership license?

    1. SJC says:

      State dealership laws are anti trust.

      1. ggpa says:

        I do not understand how this answers kdawg. Can you please elaborate?

        1. SJC says:

          The answer is no, because dealer laws are illegal.

          1. kdawg says:

            Did you type “laws are illegal”?

            1. Foo says:

              Haha.. by definition, laws are always legal. Whether they are just, fair, or even “good” is another question entirely.

            2. Well … There are a lot of Laws that Get Written – to make something ‘Legal’ but the whole structure of the ‘Law’ – is operating ‘Under Color of Law’ meaning it is actually – ‘Un-Lawful’ – which you could say about any law which is contrary to the Constitution of the Land.

  2. Vexar says:

    Tesla has a wholly owned subsidiary in Texas, probably Tesla Motors Texas Subsidiary or something truly inane. This is how they service vehicles, but cannot use it for sales. The long game here is to prove that Michigan is simply anti-Tesla, despite Tesla spending upwards of $250M a year in Michigan for parts, and having Tesla Tool and Die in Michigan (a recent buy-out).

    1. zzzzzzzzzz says:

      Nobody forbids for Tesla to sell cars in Michigan or Texas or whatever. Just sell the same way every other competitor does, don’t try to skirt “right to repair” laws, don’t be anti-competitive, don’t try to establish some abusive monopoly. Is it so much to ask?

      1. kdawg says:

        Can you order a Tesla online in Michigan and have it delivered?

        1. John in AA says:

          Yes, definitely.

          1. kdawg says:

            Ok, so that is probably how I would do it anyway. I don’t need a store (dealer) to buy something.

            Can Tesla do a test-drive campaign, to get butts in seats, but not sell the car? Or even have places where you can always take a test drive, but you still have to buy online? Maybe Tesla could open up a car rental company where, you “rent” a Tesla for a day, but it really is your test drive. 🙂

            1. Pushmi-Pullyu says:

              I don’t know what the Michigan State laws are, but from what some have reported, some States have laws prohibiting auto manufacturers from putting on “car shows” in their State. In such States, EV enthusiasts have taken it upon themselves to organize events allowing people to ride in, or “test drive”, their EVs. There cannot be any sponsorship by, or official connection with, the manufacturer.

              Too bad National Drive Electric Week comes only once a year:
              https://driveelectricweek.org/

            2. John in AA says:

              I believe the MI law is written to foreclose all those options, other than the “group of enthusiasts giving rides in their private cars” which has actually been done here.

              Also, it’s a problem that Tesla isn’t currently permitted to service cars here. Once you’ve bought it and had it delivered, it still has to either be serviced on-site by a Ranger, or taken to Ohio for service. Not that it needs service very often, and the Rangers do great, but still.

              1. Nathanael says:

                If Michigan doesn’t repeal the law soon, I’d advise Tesla to set up a big Toledo, OH store & service center. As a “look, you’re losing out on sales tax” message to Michigan.

                1. John in AA says:

                  Unfortunately, it doesn’t work that way. The sales tax is paid where the car is registered.

                  1. And..that is why some people buy properties in another state, too!

                    So – just buy a simple shack in Toledo, or an even smaller nearby town in Ohio, Get an Ohio Drivers License, visit the place on weekends, and consider your Michigan house – ‘The Cottage’! Register the Vehicle in Ohio – and Boom – Taxes go to Ohio!

      2. Ed says:

        Ok dealer shill, let’s clarify to say Tesla is forbidden to sell to the public. It can only sell to franchised dealers. No other manufacturing company is told what type of customer (dealer or end user) it can sell its product to. No other business is told by the state what business model to use.

        1. Gary B says:

          Unfortunately the folks in the wine and spirit business are told who they can sell to by Michigan law. Its getting a bit better with some limited direct to consumer selling allowed. But a vineyard has to sell to a distributor that has to sell to a retailer that sells us you and me. My neighbor is a wine importer. I ask him “Can you sell me your wine?” He cannot (but he can GIVE it to me legally!)

        2. zzzzzzzzzz says:

          Mr. Musk Cult Member,

          All businesses have rules what they can sell, what they can’t, and how to behave. Some especially unruly antisocial businesses got split into parts by force after being declared illegal monopolies, e.g. Standard Oil or AT&T. Or Microsoft had paid billions to settle anti-trust suits. Tesla is yet another wannabe “microsoft”. Any other similar company would cause customer rage trying to push for monopoly servicing its cars, but as Tesla is advertised “holy world changer”, its fans are ready do defend anything.

          1. Pushmi-Pullyu says:

            Mr. Stealership Shill:

            Practice FUD much?

            I’m gonna do something that will horrify you: Actually post the Truth.

            The Truth is that State laws protecting car dealers once had a legitimate purpose. In the past, during economic hard times, auto manufacturers practiced predatory business practices, in an attempt to force dealers to make up the monetary loss the auto makers faced due to lack of sales.

            State laws protecting auto dealers were never intended to apply to a business like Tesla Motors, which has no regional dealers.

            BTW, Mr. Stealership Shill: Your attempt to paint Tesla Motors as a “monopoly” is downright hilarious, not to mention Ludicrous™. Standard Oil once had a 90% monopoly on gas stations. Tesla Motors has a 0.039% share of the U.S. new car market, even counting only “cars” and not light trucks.

            1. Pushmi-Pullyu says:

              Oops… math error.

              Tesla’s share of the U.S. new car market (not incl. light trucks) is 0.332%.

            2. TomArt says:

              Exactly – in fact, most of the offending States changed their laws when Tesla showed up, realizing that there was a loophole for any automaker that does not have, nor ever had, a franchise dealership agreement.

              It is very important to remember that, when Tesla Motors started selling cars, it was legal for Tesla to sell direct in almost every State.

      3. X says:

        To many, many. , non-imbecile people the dealarship maphiaa ia the anti-competitive , corrupt, bribing-whomever-it-takes monopoly.
        That,s for non- shills.

        Hint: in any other country, any law-abiding car company, tesla included can sell without the mandatory middleman, i.e. yhe independent stealer.

      4. Thomas J. Thias says:

        Things can become very interesting once the Fed’s weigh in.

        FTC hinting at encouraging states to allow Tesla direct sales:

        “FTC Announces Agenda and Panelists for Workshop Examining the U.S. Auto Distribution System”

        JAN 19, 2016
        9:00AM

        CONSTITUTION CENTER
        400 7th St SW, Washington, DC 20024 | Directions & Nearby

        TAGS: Automobiles

        “EVENT DESCRIPTION
        The Federal Trade Commission held a one-day public workshop on January 19, 2016, 9 am – 5:30 pm, to explore competition and related issues in the context of state regulation of motor vehicle distribution, and to promote more informed analysis of how these regulations affect businesses and consumers.

        The workshop, consisting of presentations and discussion, focused on the following topics: (1) the regulation of dealer location; (2) laws relating to reimbursement for warranty services; (3) restrictions on manufacturers’ ability to engage in direct sales to consumers; and (4) new developments affecting motor vehicle distribution, such as autonomous vehicles, connected cars, and the rise of subscription-based automobile sharing services.”

        Ed note: Tesla and NADA testified here!

        If you have the time you can watch the entire sessions below.

        Link Goes To, “Auto Distribution: Current Issues & Future Trends – Part 1” –

        https://www.ftc.gov/news-events/audio-video/video/auto-distribution-current-issues-future-trends-part-1

        Ed Note2: The US FTC seems to be leaning towards opening up the franchise system.

        Best-

        Thomas J. Thias

        517-749-0532

        Publisher:

        https://twitter.com/amazingchevvolt

        1. TomArt says:

          Very interesting – thank you!

      5. Fool Cells says:

        true. Tesla did not grease the right corrupt government pockets to play the cronyism game. Remove the stupid franchise dealer laws and let there be competition.

  3. Huffster says:

    Isn’t this just going to open a can of worms in other troublesome states? Now those states will say “If you can apply for a dealership in Michigan, then you can here too.”

    1. Pushmi-Pullyu says:

      That’s possible, but let’s put this in perspective: There are only 4-5 States which completely prohibit Tesla from selling their cars from “stores”, or showrooms, in their States. There are some other States, such as New Jersey, which restrict the number of Tesla stores in the State.

      The momentum is on the side of Tesla. The dealership model is outmoded in the Internet age, and it seems inevitable that it will die away. The only question is how soon, and Tesla is definitely trying to accelerate the process.

      disintermediation: A word meaning “cutting out the middle man”.

      1. Nathanael says:

        There is also only ONE state which prohibits Tesla from opening *service centers* in the state. That state is Michigan.

        Even the states with restrictions on stores allow unlimited service centers. Except Michigan.

        1. james says:

          You have to admit we (Texas) did go the extra mile by creating a rebate for EV and PHEV, then adding a line all but excluded only Tesla.

          Rebate is available for only cars not purchased directly from the manufacturer…

  4. I would not doubt that Tesla could find a few dozen Tesla Model S owners in Michigan, that would be happy to hold the licence for the ‘Dealership’ and among them could be retired business owners, Veterans, etc.

    The real trick is likely the variances needed for paying staff at this new Store.

  5. evcarnut says:

    I am very surprised that they didn’t think of this at conception. Just have a Puppet figure there IE: the President of the United States., and then the “Elites” behind the scenes make the Decisions. With one exception…,Tesla Has the Right To do this . Dealership as we know them are a MONOPOLY & A Scam. Where the Employees do “ALL THE WORK” & the Dealer POMPUS Principles Make “ALL THE MONEY”..& take all The Glory..

  6. LOL says:

    Michigan is sly, allow Tesla to sell directly and in return require it to build out additinal 50 Superchargers in city centers across the state. Neat and simple.

    1. Anon says:

      There would automatically be more SuperCharger Stations in Michigan, if that state allowed Tesla to perform direct sales in the first place.

      There is nothing sly about Michigan Politicians & GM, blocking Tesla’s ability to operate normally and expand operations.

  7. Mister G says:

    “what is the hold up?”…Answer: Tesla sells EVs and not one gas guzzler.

    1. Big Solar says:

      The holdup is them trying to figure a way to deny them or put a new law in place that wouldnt affect anyone negatively but Tesla. Just a guess.

    2. Pushmi-Pullyu says:

      The holdup is that Michigan contains Detroit, home of the Big Three of U.S. automobile manufacturing. Back in 1949, the Big Three used their political clout to drive the Tucker Car Corp. out of business. The Big Three don’t have as much clout as they used to, but they still have enough to misuse Michigan State laws as protectionism to keep Tesla out.

  8. Aaron says:

    Oh, jeez, Eric.

    “Tesla did not respond to the Detroit New’s request for comment on the situation”

    New’s? U of M’s entire English department cringes at such apostrophe abuse.

    1. Aaron says:

      Quick correction. 😉

      1. pjwood1 says:

        You’re grammar, its amazing.

          1. John in AA says:

            whoosh!

          2. kdawg says:

            I believe the correct term is “yer”.

            1. Anon says:

              Maybe in Michigan? 😉

              See? An example of the proper way to express sarcasm. 😉 Oh, another one!

              Whoosh!

            2. Pushmi-Pullyu says:

              I believe it’s “yer grammer”.

              1. kdawg says:

                actually I think it is “y’er”

                1. mr. M says:

                  Woosh!

  9. bro1999 says:

    Shouldn’t be a big surprise….Musk said Tesla may need franchised dealerships over a year ago: http://www.hybridcars.com/elon-musk-says-tesla-may-need-franchised-dealerships/

    They were probably hoping to get an exemption in Michigan, but once that was KO’ed, Tesla used the last resort option of applying for a dealership license.

    So who will own the dealership in MI? Musk Associates LTD? haha

    1. Pushmi-Pullyu says:

      I vote for Iron Man Enterprises, Ltd. 😉

      1. Or – how about EMS Inc.
        (Elon Musk Solutions Inc.)
        Since he is ‘Racing Extinction’ – the intensity of his development is based on the Emergency of the issue, so – calling the EMS Makes Sense!

        Next – would he put the New Store in Down Town Detroit, or in Battle Creek, Kalamazoo, Grand Rapids, Livonia, or other??

  10. Three Electrics says:

    Excellent idea. Should have been initiated before the auto show, of course, so that their booth could be used to apply political pressure. The timing is rather silly.

  11. Nelson says:

    States with these Dealer Franchise Laws are impeding the Federal Government from collecting maximum tax funds from sales of Tesla vehicles. The bigger Tesla get the more Federal Tax revenue is collected from employees and all downstream manufactures.

    NPNS! SBF!
    Volt#671