Tesla's Eleventh-Hour Plea Against Michigan Direct-Sales Ban: Get its Michigan Suppliers Involved

The state of Michigan is unarguably still the home of the U.S. automobile industry, being home to the Detroit Three: Ford, Chrysler and General Motors.

Tesla's latest fight for the right to sell direct to customers is drawing to a close in Michigan

Tesla’s latest fight for the right to sell direct to customers is drawing to a close in Michigan

As a consequence it’s no surprise that Michigan House Bill 5606, a bill that would ban Tesla Motors from selling its premium electric cars direct to customers within the state, has been passed by both houses and is now on the desk of Michigan Governor Rick Snyder awaiting the signature that would make it law.

But while some may consider SB 5606 a foregone conclusion, Tesla Motors [NASDAQ:TSLA] has upped its fight against the bill which Governor Snyder has until the end of today to either sign or veto: the $170 million worth of business Tesla gives the state of Michigan every year through contracts with parts suppliers.

The bill, which originally introduced in May this year, was intended to function as a way to ensure that Michigan car dealerships could add additional fees onto the purchase price of cars sold in the state. Sponsored by Republican Representative Aric Nesbitt, the original bill was not even connected with Tesla. But when the bill passed to the House at the state of October, the bill was modified by striking a single word from the proposed text, turning it from a bill which wouldn’t affect Tesla into one which would make it impossible for Tesla to sell direct to customers in the state.

Moreover, claims Tesla, Senator Joe Hune — the Senator responsible for the amendment — has received substantial campaign donations over the years from the Michigan Automobile Dealers Association, the very group who want to stop Tesla from selling direct-to-customers in the state. Senator Hune’s wife is also employed at a firm which openly lobbies for the organisation.

Tesla used a loophole in the law to fight an anti-Tesla law in Massachusetts, but the Michigan bill closed that hole.

Tesla used a loophole in the law to fight an anti-Tesla law in Massachusetts, but the Michigan bill closed that hole.

While the bill itself was passed in its amended form by both the lower and upper houses, Tesla says there’s still time for Governor Snyder to veto the bill, returning it to the legislature for “a full and open debate in 2015.” And in order to persuade Snyder to do so, it has asked the army of suppliers it uses within the state of Michigan to contact the Governor directly.

One such company, reports Automotive News, is Inteva Products. A global automotive supply company, the firm is based out of Troy, Michigan and is one of fifty-six different suppliers based in Michigan to count Tesla Motors as valued customers. Responsible for producing the instrument panel used in the Tesla Model S sedan, the company has a vested interest in Tesla’s future successes, and a direct sales ban within Michigan would impact that success.

“Obviously, if they are unable to grow their market here in Michigan, that affects us, so we oppose [the bill],” said Karen Manardo, global marketing and communications director for Inteva Products.

Inteva is not alone. In fact, a total of more than $170 million of products and services are purchased by Tesla from Michigan suppliers ever year, and with Tesla set to increase production over the next few years, that figure is only set to increase.

Tesla is asking its suppliers to help it fight the legislation.

Tesla is asking its suppliers to help it fight the legislation.

The implication of course, is that by signing the bill into law, Governor Snyder would be hurting not only Tesla, but Michigan companies that rely on its custom in order to survive.

The bill, which was amended to specifically remove the word “its” from its text in order to eliminate the same loophole used by Tesla back in September to reverse a sales-ban in Massachusetts, received just one vote against it as it was passed through both houses, passing the Senate 38-0 on October 2nd and passing the House by 106-1 that same afternoon with the amended language in place.

At the time of writing, a number of Tesla’s suppliers are believed to be pleading Tesla’s case by talking directly with the Governor’s office in a last-ditch attempt to head the bill off before it becomes law. But even if Governor Snyder does sign the bill today, we’re guessing Tesla isn’t about to lie down and take this piece of legislation lightly.

This could be a very, very long fight indeed.

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