Michigan Bans Factory-Direct Selling by Tesla

Mich. Gov. Rick Snyder has signed into law a measure that blocks carmakers such as Tesla Motors Inc. from selling vehicles directly to consumers.

The bill began in May as an unrelated proposal to standardize how dealers charge customers for new-car paperwork and block carmakers from dictating such terms.

Language about prohibiting non-dealer sales appeared in the bill on Oct. 2. The bill then zipped through the Michigan legislature in record time and without the public discussion Tesla sought.

Snyder describes the measure as clarifying a state law that already requires carmakers to sell through franchised dealers. Tesla contends that such laws were designed to prevent carmakers from competing with their own dealers. It argues that franchise laws are not intended to prevent a new carmaker such as Tesla, which has no dealer network, from selling direct.