Anti-Tesla bill reaches Michigan governor's desk
EV maker calls revised measure a 'sneak attack' that deserves public hearing
DETROIT -- Legislation that would prevent Tesla Motors Inc. from selling its electric vehicle lineup directly to Michigan consumers has cleared the state’s legislative chambers and is awaiting the signature of Republican Gov. Rick Snyder.
“Right now the governor’s office is evaluating the bill, and there has not been a decision to sign it or not sign it as of yet,” Snyder’s spokesman said today. The deadline to sign the bill is Oct. 21.
H.B. 5606, first introduced in May, was initially crafted to determine whether automakers could stop affiliated franchised dealers from charging customers certain types of fees, Daniel Crane, a University of Michigan law professor, wrote in a letter sent to Snyder’s office today.
The bill's sponsor, Michigan Rep. Aric Nesbitt, a Republican, told Crain’s Detroit Business, an affiliate of Automotive News, that the bill first passed in the House in mid-September and that it had nothing to do with Tesla.
But once the bill was sent to the Senate on Oct. 1, the anti-Tesla language was added, and there was no debate or public attention brought to the revised measure.
The amended bill passed the Senate 38-0 on Oct. 2 and was sent back to the House, where that afternoon it was approved 106-1 with the new anti-Tesla language.
'More than welcome'
Terry Burns, executive vice president of the Michigan Automobile Dealers Association, said Wednesday that Tesla is “more than welcome” to come to Michigan, but he would assume that the automaker would want to follow Michigan law.
“One good thing about being governor, you get to do whatever you think is appropriate at the time," Burns said. "We hope and look forward to him signing the bill and clarifying the language, and we hope he does it soon.”
Diarmuid O’Connell, Tesla’s vice president of business development, said in an interview Wednesday that there’s a “basic fairness issue here.”
He said Tesla has been working in good faith with government agencies and lawmakers in Michigan to explore how the company could market, sell and service vehicles in the state.
By adding the amendment at the last minute, O’Connell said dealers are acting against Tesla’s “sincere efforts” to do business.
Tesla’s only request, O'Connell said, is that the issue be debated in public and “in the light of the day.”
Tesla already had its eye on H.B. 5606 for several months. O'Connell said Tesla tracks bills across the country that affect issues between manufacturers and dealers because the automaker is “habituated to these sneak attacks.”
When Tesla learned of the amendment on Oct. 3, after the bill passed both chambers, O’Connell said the company reached out to the Snyder administration.
“We’ve had a very open and productive dialogue with folks within the administration. They’ve given us the opportunity, brief as it is and with the law already voted on as it is, to articulate what’s at stake for us," he said. "It’s the first time, frankly, we’ve had the opportunity to do that and we’re grateful for that opportunity.”
Michigan, home of the Detroit 3 automakers, is the most populous state without at least one Tesla store or gallery, according to the company's website.
Tesla has faced opposition across the country from dealers who contend the automaker’s plans to sell directly to consumers violate state franchise laws.
Even the company's marketing efforts have been blunted. Just last month, Tesla was forced to end an Iowa test-drive event because it violated state law requiring a license for any auto retailing activity.
James Chen, Tesla’s vice president of regulatory affairs, told The Wall Street Journal last week that he met with Michigan leaders in Lansing to derail or amend the legislation. “We are playing a game of Whac-A-Mole in every state,” he told the paper.
Prominent Republicans, such as Texas Gov. Rick Perry, New Jersey Gov. Chris Christie and U.S. Sen. Marco Rubio, have supported direct distribution. But those positions risk alienating longtime conservative allies in the dealer community who often financially support Republican candidates.
Synder is seeking re-election this year in a tightly contested race against Democrat Mark Schauer.
Crane said that car dealers do important work, but they should have to compete in a free market like anyone else. He has written research papers, blogged and debated car dealers on national TV about Tesla’s fight with franchised dealers. Crane said he is not being paid by Tesla.
He wrote about car dealers: “Most fundamentally, they should not be able to get away with sneaking amendments into bills at the last minute in a way that precludes fair and open discussion of what they know is a highly controversial issue.”
Crane, in an interview Wednesday, said that a veto of the bill doesn’t have to mean Snyder is siding with Tesla. Instead, Snyder can say that he doesn’t like how the bill came about procedurally, and that legislators should “go back to the drawing board” and have a hearing.
“I know it’s an election year, I know he’s in a tight race and he has lots on his mind, but I really hope that he will stop and look at what happened here,” Crane said. “When this was debated in New Jersey, when this was debated in Ohio, when this was debated in Texas and North Carolina and Massachusetts, place by place, this issue got a hearing."
No comment from lawmakers
Spokespersons for the House and Senate Democrats said their caucuses were unaware of the effect the added language had on Tesla.
Spokespersons for the House and Senate Republicans did not respond immediately to a request for comment. Nesbitt, the bill sponsor, did not respond, either.
Republican Rep. Tom McMillin was the only member in the House or Senate to vote against the bill once the anti-Tesla language was added, but he did so because of his problem with the original language in the bill.
He didn’t feel it was right for the government to get involved in deciding contract language between private companies.
McMillin said he was not aware of the implications for Tesla with the added language, but said if he had been, he still would have voted no. He supports Tesla's efforts to sell directly to customers.
He added: “If a company wants to try something different we shouldn’t be standing in their way as the government and prohibiting it. We should let the free market decide.”
Chris Gautz of Crain’s Detroit Business contributed to this report.
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