Truth Frequency Radio
Oct 22, 2014

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Last week, we told you about a hastily amended bill in Michigan that would prevent Tesla from setting up shop in the Wolverine State. It had passed both houses of the legislature and was headed to Governor Rick Snyder’s desk. The only question remaining was: would Snyder sign it?

Then yesterday, according to Detroit News, General Motors officially voiced support for the bill. Shortly thereafter, Governor Snyder put pen to paper.

The latter isn’t surprising. Even though Snyder is a Republican, and even though Republicans have often agreed — in principle — with allowing Tesla to sell directly to consumers and let the marketplace determine its success or failure, he is the governor of Michigan, homebase for America’s Big Three automakers. It seems logical that he’d try to protect those companies, which employ huge numbers of Michiganders.*

What is surprising, though, is that GM would announce support for the bill. Sure, it makes sense for GM to approve of it, but why issue a statement in support? No other automaker went that far.

There are a range of possibilities, but two seem likelier than most.

It’s entirely possible that dealers encouraged GM to make a public show of support. Snyder’s reluctance to state whether he would sign or veto the measure clearly indicated some ambivalence on his part, so it makes perfect sense that members of the Michigan Automobile Dealers Association, which lobbied hard for the bill, would encourage GM to weigh in. To hear an opinion from such a huge corporation could’ve been a determining factor in Synder’s decision.

It’s also possible that GM sees Tesla as a threat. At this point, it’s not a significant threat to GM’s bottom line. However, Tesla’s new business model — web-centric, commission-free, haggle-free — could encourage dealers and consumers to demand changes in the status quo. Those changes could affect what consumers are willing to pay for new vehicles, the ebb and flow of money between dealerships and GM, or any number of things that GM (and its shareholders) would dislike.

It appears that Tesla has no recourse in Michigan: the bill is now law. However, if significant numbers of consumers begin crossing state lines to purchase Tesla vehicles — or if the blowback against GM and dealers becomes too severe — maybe that will change.

* For what it’s worth, Snyder says that the new law doesn’t affect Tesla because car companies were already prohibited from selling directly to consumers under state law. In a blog post, however, Tesla notes that the law imposes a range of new restrictions: ” It also seeks to prevent Tesla from operating a gallery in Michigan that simply provides information without conducting sales. We could even be barred from telling people about our car.”

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