{"id":3148,"date":"2014-10-24T14:23:54","date_gmt":"2014-10-24T14:23:54","guid":{"rendered":"http:\/\/ncjolt.org\/?p=3148"},"modified":"2020-06-04T20:53:40","modified_gmt":"2020-06-04T20:53:40","slug":"testy-about-tesla-michigan-bans-electric-car-companys-direct-sales-model","status":"publish","type":"post","link":"https:\/\/journals.law.unc.edu\/ncjolt\/blogs\/testy-about-tesla-michigan-bans-electric-car-companys-direct-sales-model\/","title":{"rendered":"Testy about Tesla: Michigan Bans Electric Car Company\u2019s Direct Sales Model"},"content":{"rendered":"

Michigan residents may now have a more difficult time obtaining Elon Musk\u2019s inventive electric cars. On Tuesday, Michigan Governor Rick Snyder signed<\/a> a bill that prohibits direct to consumer automotive sales.<\/p>\n

Although this legislation applies to all car manufacturers, Tesla is currently the only company employing that model.<\/p><\/blockquote>\n

The bipartisan legislation, which passed through the Michigan legislature earlier in October, \u201cforces automakers to sell vehicles through the network of dealers rather than directly to buyers<\/a>.\u201d However, the governor insists that the law only clarifies existing legislation that already limited car sales to transactions made through the established dealer-franchise system, under which all other companies (including many of the car manufacturers headquartered in Michigan) are already operating. Although Tesla can still sell cars to consumers online, the law creates \u201can effective prohibition against Tesla opening a store in Michigan<\/a>.\u201d
\nMichigan is not the first state to impose a direct-sales ban. Tesla is prohibited from selling direct to consumers in four other states as well: Texas, New Jersey, Arizona and Maryland. However, Tesla is still allowed to display cars to consumers in those states in galleries so long as the company does not discuss price, allow for test drives, or take orders.\u00a0\u00a0 The Michigan law prohibits even this interaction<\/a>.
\nTesla, which first gained recognition with the production of the Tesla Roadster, the first all-electric sports car, is innovative both in product design and business model. Not only is the company innovating the lithium batteries and other core technology designed for its vehicles (the battery in the Model S doubles the range of any other available electric vehicle<\/a>), but it also utilizes an innovative sales model. Tesla does not sell its cars to dealers or distributors, instead preferring to interact with the customers through company-owned stores and showrooms and, of course, through the company\u2019s website. In a previous interview with AutoTrader.com<\/a>, a Tesla executive said that the goal of such a sales model was to \u201cengage with people when they are not thinking about buying a car,\u201d and \u201ceducate them on what electric cars and, particularly, what Tesla electric cars can provide.\u201d The store or showroom, then, is a place to peruse, where Tesla\u2019s website is the place to buy.
\nMost other car manufacturers use independently-owned and operated entities to reach the public, and are actually legally required to operate that way under many states\u2019 franchise law<\/a>. Tesla argues that it is exempt from such requirements because it has never licensed a franchise or dealership.\u00a0\u00a0 However, because the legislation signed into law by Gov. Snyder explicitly prohibits all<\/em> direct-to-consumer sales locations, a distinction between franchised and non-franchised business is now moot.
\nAs far as Tesla\u2019s future for Michigan is concerned, Tesla executives will likely continue to discuss and object to the regulations, as Gov. Snyder invites them to do<\/a>. However, if Michigan residents want to examine a Tesla or test drive a car in person any time soon, they will likely have to visit an out-of-state store or showroom, perhaps in near-by Ohio or Illinois, and then order the car online and have it delivered by a third-party service. Seems simple enough, right?<\/p>\n","protected":false},"excerpt":{"rendered":"

Michigan residents may now have a more difficult time obtaining Elon Musk\u2019s inventive electric cars. On Tuesday, Michigan Governor Rick Snyder signed a bill that prohibits direct to consumer automotive sales. Although this legislation applies to all car manufacturers, Tesla is currently the only company employing that model. The bipartisan legislation, which passed through the …<\/a><\/p>\n","protected":false},"author":1,"featured_media":3149,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[51],"tags":[],"_links":{"self":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/3148"}],"collection":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/comments?post=3148"}],"version-history":[{"count":1,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/3148\/revisions"}],"predecessor-version":[{"id":7413,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/3148\/revisions\/7413"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media\/3149"}],"wp:attachment":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media?parent=3148"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/categories?post=3148"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/tags?post=3148"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}