"These changes into the law are sending a strong signal to all companies that Michigan is not welcome, or is not open, to new companies," James Chen, Rivian's vice president of public policy, said in an interview.
The bill was on the state House's session agenda last week but wasn't taken up. State Rep. Jason Sheppard, a Republican who sponsored the bill, told Automotive News last week that discussions will continue on the Tesla language and that the bill could resurface in October or November.
Michigan prohibits automakers from selling directly to customers. But in January, Tesla won a green light to operate in Michigan without franchised dealerships through an agreement with the state resolving a federal lawsuit the company brought in 2016 against the state's ban.
Under the stipulation, Tesla can operate its galleries in Michigan but the vehicle title must be transferred in another state. The agreement also allows Tesla to operate service centers indirectly through a subsidiary.
The new bill would codify that agreement into law, exempting the EV maker from the state's direct-sales prohibition. It also adds language defining what constitutes a sale, and it would prohibit other automakers from directly or indirectly owning a service center.
Terry Burns, executive vice president of the Michigan Automobile Dealers Association, said the bill is the group's response to the agreement and that the revisions are necessary to correct gaps in the law.
Writing the Tesla agreement into statute "would make it now a legislative issue rather than just a settlement issue. That way, it's in the law and everybody knows what it is," Burns said last week.
"We stand on the same position we've always stood on," he added, "and that is, for the last 30 years, every other manufacturer in the world that sells vehicles here uses the franchise system."
A spokesman for the Alliance for Automotive Innovation said in an email to Automotive News that it opposes the Michigan bill and is "opposed to treating one OEM differently than other competitors in the same market."
GM and Ford have partnered with EV startups as both carmakers work to accelerate their electrification strategies. Ford last year invested $500 million into Rivian, while GM this month took an 11 percent stake in Nikola Corp. and said it plans to build its Badger electric and fuel cell pickups.
Several EV startups — including Rivian, Lordstown Motors, Lucid Motors and Bollinger Motors — argued in a letter last week to state lawmakers that Michigan's interpretation of the state's franchise law in the Tesla agreement seemingly extends to other automakers and the bill "would put an end to that for all but a single manufacturer."
Chen, of Rivian, said its vehicles will be made to customer specifications and not produced at volume to sit on dealership lots.
Sheppard pushed back on the argument that his bill blocks EV startups from selling in Michigan, saying direct sales already are prohibited. He said he is not looking to use his bill to have a broader debate over the sales model.
"This boils down to, they want to sell cars the way they want to sell cars," Sheppard said. "We're not changing current law. Just because one company got a settlement does not change our law."
Whitney McDonald contributed to this report.