Michigan Governor Outlaws Tesla Sales

Source: courtesy of Tesla Motors
In a move that was expected by everybody, Governor Rick Snyder of Michigan Tuesday signed legislation banning Tesla Motors Inc. (NASDAQ: TSLA) from selling directly to Michigan consumers. As interpreted by Tesla, the legislation even prohibits the company from opening a gallery where it can show off the car and talk to customers about it in person.

Michigan now joins four other states — New Jersey, Maryland, Texas, and Arizona — that have banned Tesla from selling directly to consumers. Auto dealers in the five states succeeded in persuading legislators that the property and sales taxes the dealers pay combined with the number of workers they employ are far more important than letting customers chose to buy what they want. Governor Snyder said that direct sales of new cars is already banned in Michigan. The vote in the Michigan legislature was supported by both political parties and Governor Snyder, a Republican, is in a very tight re-election campaign.

The Detroit Free Press reports that General Motors Co. (NYSE: GM) earlier today urged the governor to sign the bill.

While the law does not mention Tesla by name, the electric car maker is the only company that will be affected by the new law which requires that all cars sold in Michigan must be sold through the network of franchised dealers. The governor’s claim that the law does not change existing state law regarding sales of new cars was challenged by a law professor at the University of Michigan: “Does the law change anything or not? If it doesn’t, why did the car dealers want the changes?”

Shares of Tesla closed up about 1.9% on Tuesday at $234.75 in a 52-week range of $116.10 to $291.42.


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