As Tesla Motors ramps up production ahead of the launch of its Model 3 electric car, states where it is banned from selling and servicing its vehicles directly to consumers will not be candidates for production sites.
ROMULUS, Mich. - As Tesla Motors ramps up production ahead of the launch of its Model 3 electric car, states where it is banned from selling and servicing its vehicles directly to consumers will not be candidates for production sites.
That's according to Diarmuid O'Connell, Tesla's vice president of business development, who spoke Thursday at the World Mobility Leadership Forum at the Detroit Airport Westin.
"Yes, it's absolutely true that we'll need to expand our manufacturing footprint, and it would be logical to do it in places like Michigan, because of the historical industry here," O'Connell told reporters. He added that places such as Texas and China and Europe would also be candidates, for trucks and for foreign volume sales, respectively.
"But it's also true that a state that doesn't allow us to engage in our core business, which is selling and servicing vehicles, is a very poor candidate for manufacturing operations in the long term, or even near term," O'Connell said.
Tesla has sued three of Michigan's top government officials, alleging the state's ban on its direct-to-consumer sales model is unconstitutional. The automaker is requesting a jury trial.
In 2014, Gov. Rick Snyder, who along with Secretary of State Ruth Johnson and Michigan Attorney General Bill Schuette is named as a defendant in Tesla's lawsuit, signed legislation that strengthened Michigan's existing ban on direct-to-consumer sales by vehicle manufacturers.
Earlier this month, the state rejected Tesla's application for dealership licenses. Michigan joins Utah, Connecticut and Texas in denying Tesla such licenses, though Tesla is permitted to - and does - operate service centers and galleries in those states.
In wide-ranging remarks Thursday, O'Connell told attendees that he understands why some states set up franchise dealer laws to protect franchisees against franchisers, but said it's irrational that manufacturers can't sell directly to consumers.
"This is a model - selling direct - that's not controversial in communist China, in socialist France," O'Connell said. "Why should government be dictating the business model by which a manufacturer accesses the market?"
O'Connell said he had not yet received a response from the state of Michigan in terms of the lawsuit. He said he had read remarks in the news that Snyder said he was willing to work with the company on selling its wares in the state.
"That's a wonderful and empty gesture," O'Connell said. "What would have been very helpful is if he allowed us to explore the model that I think led ... in some respects to his own success."
O'Connell was referring to Gateway, a computer company where Snyder had been an executive.
Snyder said in an interview with Automotive News Wednesday that Tesla has not made a viable argument for selling cars directly to consumers in the state.
He also acknowledged the success of Gateway's direct-selling set-up.
"I've sold a lot of computers, I know that model pretty well," Snyder told the publication.