Tesla Sues Michigan Over Sales Ban (usatoday.com)

An anonymous reader quotes a report from USA Today: Electric automaker Tesla Motors filed a lawsuit Thursday against Michigan state officials, escalating its multi-year battle to sell vehicles directly to consumers. Tesla's action comes less than a week after Michigan Secretary of State Ruth Johnson effectively rejected the automaker's application for dealership and service facilities by asking for proof that Tesla is a franchised dealer. Tesla, unlike other automakers, sells its cars directly to consumers through company-owned stores in other states. "Tesla Motors brings this lawsuit to vindicate its rights under the United States constitution to sell and service its critically-acclaimed, all-electric vehicles at Tesla owned facilities in the State of Michigan," the automaker said in its complaint in federal court. The California automaker named Johnson, Michigan Gov. Rick Snyder and Attorney General Bill Schuette as defendants. Tesla submitted an application for a dealership license in fall 2015 with a plan to open a retail gallery in Grand Rapids, Mich. In a Sept. 7 hearing, a panel of administrative law examiners heard arguments. Last Thursday, they rejected the license for Tesla. "The license was denied because state law explicitly requires a dealer to have a bona fide contract with an auto manufacturer to sell its vehicles," Johnson said in a statement. Tesla wants to sell its high-end battery-powered cars directly to consumers without a franchised dealer, much like Apple sells its products. The automaker's lawsuit asks a federal judge to declare that the state violated the due process and equal protection clauses of the Fourteenth Amendment and the constitution's commerce clause. Snyder signed a law in October, 2014, that prohibited Tesla from selling cars directly to consumers by requiring all automakers to sell through a network of franchised dealers.

Comments

Independentd ealerships=ineffective retail system

[sinij]

I am cheering for Tesla to disrupt dealership system, as these dealerships are substantial and unnecessary added expense and hassle. They are there to sell you electronic rust modules and turbinator options that you don't want and rip you off on oil change "service" packages. Manufacturers should be able to sell directly to customers.

Re:these new companies trying to get around old la

[YouGotTobeKidding]

you don't think mfg'ers do that already? all it does it cut the middle man out... who also raise the price.
This law was inacted because Henry Ford was a 'douche' back in the day and they wanted to stop it from happening. BUT unlike then the industry has a lot more players all with competitive products. If a company wants to sell direct they should be allowed to. That is how it works with - for example - mattress.

Re:these new companies trying to get around old la

[ShanghaiBill]

these old laws were in place for a reason.

Actually, they are in place for several reasons:
1. Greed
2. Cronyism
3. Corruption

skipping the dealer allows the manufacturer to set the price

Saturn used fixed prices, despite using dealerships, so this seems like a bogus argument. Dealerships are just another layer of inefficiency, adding delay and expense.

My state, California, allows direct sales by manufacturers. How do people in Michigan benefit by having fewer choices than I have?

Re:these new companies trying to get around old la

[amicusNYCL]

skipping the dealer allows the manufacturer to set the price. and they would never fix the price with a defacto monopoly, right?

Haha, what? You're whining about a manufacturer selling their product for whatever price they want to sell it at? Tesla "fixing the price" on their own products that they make and sell themselves, that's funny. How does a single company "fix" the price? They don't "fix" the price, they set the price, that's the price, anyone can buy it at that price. You might as well whine about McDonald's "fixing" the price on a Big Mac because they cost the same anywhere you buy them.

Tesla doesn't have a monopoly on electric cars, and they don't have a monopoly on cars. If they want to set the price of their cars at $100,000, fine, they won't get a ton of sales but if they make a profit then why do you care? If they want to compete with other car manufacturers then they can lower the price, or they can design another model which costs less to produce so that they can reach a bigger market and still make a profit. Guess what Tesla decided to do with the Model 3. Go ahead, guess.

Tesla doesn't have a monopoly on anything except Tesla cars, and you don't have some right to buy a Tesla car for $10k if they don't want to sell them for that much. Don't bitch and moan about old laws that were bought and paid for that shouldn't exist any more. The car market at this point is too big and has too many competitors for price fixing, because if that happens there is a major opportunity and incentive for one of those many competitors to undercut everyone else and make huge sales.

Dealerships are a facade

[Gordo_1]

They're really just repair shops who've applied with an auto manufacturer to become a local monopolist middle-man for a brand of automobiles and associated parts. They make the bulk of their money on repair work (in-warranty from the manufacturer and out-of-warranty on highly marked-up fees charged to consumers).

As far as I'm concerned, the sooner we move to a world where all cars can be purchased online direct, the better.

Re: these new companies trying to get around old l

[stealth_finger]

Being allowed to sell something isn't a right, it's a privilege. One that Tesla doesn't have.

Why doesn't tesla have the right yet McDonalds, Apple, Slazenger and a jillion other companies do? Oh yes, because dealers lobbied enough to get it enshrined into law that no one else is allowed to sell cars, especially not the people who make them. You HAVE to use the middleman who does nothing but make your product more expensive and they have no incentive to make a better service or compete on price because legally they have no competition. Just imagine you could buy a car at walmart or on amazon or from anyone who decides to open a car shop. How would that be bad for anyone except the entrenched car dealerships? Americans claim to be all about the free market but they stifle it at every opportunity.

Re:these new companies trying to get around old la

[mysidia]

The real motive is protecting the car dealerships from competition and protecting their legacy business model.

Also, protection of Sales Tax revenues, which are huge..... Car sales are one of the largest sources of Sales Tax.
If prices go down, then that means lower tax revenue for legislators to fund their programs.