Gov. Rick Snyder signs 'anti-Tesla' bill into law

Gov. Rick Snyder on Tuesday signed a bill his office described as bipartisan legislation that simply strengthens existing law as it pertains to automobile dealership sales in Michigan.

DETROIT, MI - Gov. Rick Snyder on Tuesday signed a bill his office described as bipartisan legislation that simply strengthens existing law as it pertains to automobile dealership sales in Michigan.

But electric carmaker Tesla Motors says the legislation is a direct effort at shutting the California company and its unique, direct-to-consumer sales model out of Michigan.

HB 5606 was approved 38-0 in the Senate and 106-1 in the House of Representatives after being presented to state legislators as aimed at prohibiting car dealerships in the state from dictating fees they charge customers. With the legislation, dealerships can decide whether or not to charge certain transaction fees.

"This bill does not, as some have claimed, prevent auto manufacturers from selling automobiles directly to consumers at retail in Michigan – because this is already prohibited under Michigan law," Snyder said in a letter to lawmakers that accompanies the signed bill.

Todd Maron, general counsel for Tesla, said that not only does it further ensure that company cannot sell directly to consumers in the state, it goes so far as to prohibit Tesla from displaying its cars to and communicating with potential customers in Michigan.

"These changes were put in at the last minute with nobody vetting them," Maron said, adding, "It looks like what they were trying to do is completely shut us out of Michigan."

In a blog on the company's website, Tesla derides the legislation as "A Raw Deal in Michigan."

Terry Burns, executive vice president of Auto Dealers of Michigan, told MLive last week after the proposed law easily passed through both state chambers that Michigan law already prohibits direct-to-consumer car sales, while Rep. Aric Nesbitt, R-Lawton, one of the bill's sponsors, said the amended legislation has nothing to do with Tesla.

Snyder said in a release Tuesday that the change in law merely allows manufacturers who do not have their own franchised dealers to sell through another manufacturer's network of franchised dealers. From Snyder's office:
"They will be required, just as they are now, to sell through a franchised dealer, and not directly to consumers. HB 5606 does nothing to change this fact. At most, it clarifies the existing requirement in Michigan law."

Snyder added that lawmakers should also discuss the current business model of car dealership networks to determine whether it's best for consumers.

"We should always be willing to re-examine our business and regulatory practices with an eye toward improving the customer experience for our citizens and doing things in a more efficient and less costly fashion," he said.

Tesla, which sells its cars in at least 22 states, typically out of shopping mall storefronts, has already run into what some see as dealership-backed laws preventing its direct-to-consumer sales in places such as Texas, Arizona, New Jersey, and to some degree, Maryland, according to Maron. In those instances, he said dealerships have been trying to protect their traditional sales structure against Tesla's unique model.

In Michigan, Maron acknowledged that the company is not licensed to sell directly, but said it had been working with the Sec. of State Ruth Johnson's office to change that.

With parts suppliers and other support, Tesla said it represents $140 million of economic activity in Michigan this year. 

Below is a video of Snyder clarifying his position on the bill. 

MLive Capital/Lansing business reporter Emily Lawler contributed to this report