Michigan House lawmakers backtrack on agreement that would have allowed Tesla direct sales and Service Centers in the state

Almost a year ago Tesla and the state of Michigan reached a settlement that would finally allow the automaker to sell vehicles directly to consumers, and open Service Centers in the state.

The deal, in which Tesla would dismiss their 2016 lawsuit, appeared to finally put an end to an “anti-Tesla” bill that was signed into law in 2014. That bill was largely seen as a way to protect the big three automakers, General MotorsFord Motor Company, and Fiat Chrysler, which sells vehicles through its franchised dealers.

As lawmakers in the state passed House bill 6233 this week, it appears as though some extra lobbying from those automakers may have paid off. The bill, which was passed with a 65-39 vote, removes both the language that would have allowed direct-to-consumer sales, and reversed the ban on Tesla operating Service Centers in the state.

The bill states:

Sec. 14. (1) A manufacturer shall not do any of the following:

(i) Sell any new motor vehicle directly to a retail customer other than through franchised dealers (emphasis added), unless the retail customer is a nonprofit organization or a federal, state, or local government or agency. This subdivision does not prohibit a manufacturer from providing information to a consumer for the purpose of marketing or facilitating the sale of new motor vehicles or from establishing a program to sell or offer to sell new motor vehicles through franchised new motor vehicle dealers that sell and service new motor vehicles produced by the manufacturer.

(q) Own Directly or indirectly own a motor vehicle service and repair facility (emphasis added), except that a manufacturer may own a service and repair facility for the repair of manufacturer owned vehicles and, at the request of a fleet operator, for the repair of a fleet operator’s vehicles as permitted under the subdivision (p) (iii).

Even though the bill has been passed by the house, it is not law yet. The Detroit News reports it still needs Senate approval and the governor’s signature, so it wouldn’t be surprising to see the bill be sent back to the house for changes.

Although we couldn’t find any reference to Tesla dropping their original lawsuit, it is unlikely they would have until the changes agreed to as part of the settlement became law. That point didn’t seem to be lost on House Minority Leader Christine Greig, D-Farmington Hills, who unsuccessfully tried to make changes to the bill before it was passed.

“It does not solve the problem that we have with the lawsuit with Tesla,” Greig said. “It opens up the state to additional litigation, which costs taxpayer dollars. And it also is a very anti-market approach to vehicle sales.”

It will definitely be interesting to see how this plays out over the next few weeks. If the bill ends up passing through all levels of approval, Tesla owners in Michigan will continue to be forced to travel out of state to receive service.

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