DETROIT, MI - It's hard to remember the last time the word "its" has held such gravity in a proposed piece of state legislation, let alone one that relates to vehicle sales, reported Michigan Live.
But in a bill that has made it onto Gov. Rick Snyder's desk, the word "its" would be taken out of a Michigan law, and that would essentially ban Palo Alto, Calif.-based electric car maker Tesla Motors from doing business in the state, according to Todd Maron, Tesla's general counsel.
HB 5606, which principally addresses a separate issue surrounding the fees auto dealerships charge for preparing documents, had language added in a substitute from the Senate floor that alters just one word of existing Michigan law:
HB 5606 states a manufacturer cannot "Sell any new motor vehicle directly to a retail customer other than through franchised dealers, unless the retail customer is a nonprofit organization or a federal, state, or local government or agency."
MCL 445.1574 states that a manufacturer cannot "Sell any new motor vehicle directly to a retail customer other than through its franchised dealers, unless the retail customer is a nonprofit organization or a federal, state, or local government or agency."
"It's hugely important and that's why dealers sought to have it stricken," Maron said. "By taking that out it changed to whether you had franchised dealers."
That's not all the legislation does to make it an "anti-Tesla" bill, according to Maron.
He said that words near the end of HB 5606 also alter how cars are permitted to be shown in the state, meaning that Tesla would not be permitted to display its cars to potential customers.
"These changes were put in at the last minute with nobody vetting them," Maron said, adding, "It looks like what they were trying to do is completely shut us out of Michigan."
Terry Burns, executive vice president of Auto Dealers of Michigan, told MLive last week after the proposed law easily passed through both state chambers that Michigan law already prohibits direct-to-consumer car sales, while Rep. Aric Nesbitt, R-Lawton, one of the bill's sponsors, said the amended legislation has nothing to do with Tesla.
Tesla, which sells its cars in at least 22 states, typically out of shopping mall storefronts, has already run into what some see as dealership-backed laws preventing its direct-to-consumer sales in places such as Texas, Arizona, New Jersey, and to some degree, Maryland, according to Maron. In those instances, he said dealerships have been trying to protect their traditional sales structure against Tesla's unique model.
In Michigan, Maron acknowledged that the company is not licensed to sell directly, but said it had been working with the Sec. of State Ruth Johnson's office to change that.
With parts suppliers and other support, Tesla said it represents $140 million of economic activity in Michigan this year.
"This is a state that we've shown huge commitment to and we wan to show more commitment to," Maron said.
Gov. Snyder has until Oct. 21 to act on the bill. Dave Murray, Snyder's spokesman, told MLive last week that it is being reviewed.
Nesbitt, one of the bill's sponsors, maintains that though the bill's been amended, it has nothing to do with Tesla. He said he thinks Tesla is "using this as kind of a red herring to talk about their issue, which is already covered under current law."
Burns, of the Auto Dealers, said that the amendment was to clarify the bill's application to all deals, as some have tried to claim exemptions in the past. It doesn't represent a regulatory change, he said.
"All the original equipment manufacturers in the world that do business here comply with the law, and it's worked very well," Burns said last week.
Maron said that even in its pre-amended form, the bill should raise consumers' eyebrows. He said it is designed so that dealerships can tack on additional fees to the purchase price for all vehicles.
"Those are the kind of fees that we as a company don't ever charge. They're controversial," he said, adding, "The whole thing here is anti-consumer."
