Michigan Says Selling Tesla Electric Cars in State is Illegal, Again

2016 Tesla Model S in red color

2016 Tesla Model S | Tesla

Tesla Motors has, once again, been blocked from selling its electric cars directly to customers in Michigan.

Over the past couple of years, Tesla has been engaged in a battle with Michigan’s franchised car dealers who—like dealers in several other states—view Tesla’s direct-sales model as a threat. Most recently, Tesla submitted an application for a Michigan dealership license. That application was denied by the Michigan government after a hearing earlier this month, reports The Detroit News.

This indicates that the home state of Ford, General Motors, and Fiat Chrysler Automobiles (FCA) will stick to its direct-sales ban. That ban was instituted two years ago in response to Tesla’s attempts to sell cars in Michigan.

Tesla’s dealership license was denied because the company’s business model of selling cars directly to customers is illegal under Michigan law, according to the state’s final ruling.

With encouragement from state auto-dealer groups, legislators in 2014 quietly changed the language of a franchise law to prohibit automakers from selling cars directly to customers. The change involved subtle tweaks to the wording of certain phrases.

That included things like changing the phrase “the manufacturer’s new motor vehicle dealers,” to “franchised dealers.”

A Tesla showroom

A Tesla showroom | Joe Raedle/Getty Images

The revised law also removed the word “its” from a reference to a manufacturer’s franchised dealers.

At the time, Tesla accused lawmakers and the auto-dealer lobby of pushing the revised legislation through in such a manner as to limit the amount of time for public comment.

A bill allowing Tesla and other automakers to sell cars directly to customers was introduced in the Michigan state legislature in February.

However, no action has been taken on it, and it will expire at the end of the year. Under Michigan law, Tesla has the right to appeal the decision regarding its dealership license. The state will also reportedly continue a review for a Tesla used-car dealership license.

In May, Tesla general counsel Todd Maron told The Detroit News that if its dealership application was denied, the carmaker would either take the state to court, or try to lift the direct-sales ban by influencing legislation changes.

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