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Tesla gets a huge win in Michigan as direct sales ban bill flops in state senate

Might this be the first domino to fall in the fight against direct sale bans?!

MT Blake posted in USA News
10w ago
19.5K

House bill 6233 in Michigan has quietly been put out to pasture after their state senate failed to take any action before recess. The bill would have banned direct sales of automobiles in the state where the automotive industry began.

Seen as 'anti-EV' by many, this bill would have effectively banned the sales of Tesla, Lucid, Polestar, and Rivian, due to the fact they use a direct sales structure. If you're not familiar, this means they don't have independently owned dealers - they're all corporate-owned and hence, direct-sales.

The direct-sales structure is contrary to the independent franchises we've seen in the US, with laws popping up against it since the 1930s. The laws were first touted as protectionist for the resellers in the event a manufacturer decided to open a dealer next door to compete against the independent franchisee.

Charlie Deets @charliedeets

Charlie Deets @charliedeets

As time has marched on, however, these laws have come to be seen as 'anti-EV' due to the sales structure of all the electric vehicle manufacturers. The direct-sales bans in states such as New Mexico, Alabama, and South Carolina (all have banned service centers too) are believed to hamper EV vehicle adoption rates.

With states such as California creating laws to ban all but zero-emission vehicles (starting in 2035) it can only be assumed the direct sales laws will fail or be rolled back as more and more people are forced to buy EVs. Long-standing manufacturers are making more and more EVs each year - whether they like it or not - leading to further competition in the market. The atmosphere for conflict should only become more palpable if more bills banning direct sales are introduced.

Colton Kresser @coltonkresser

Colton Kresser @coltonkresser

Why might an auto-manufacturer want direct sales? Reasons such as control over the buying process and the fact servicing EVs won't be as profitable as the dino-fueled brethren. Servicing EVs is considerably less when you account for the lack of spark plugs, filters, emissions-related parts, and even brake pads - energy spent into brake pads is routed through regenerative braking instead. Other than suspension components, there isn't going to be a lot to fix.

If the automotive servicing model is broken with EVs and dealers make most of their money with service... why would you want independent dealers? Direct sales and the control over the pricing structure and customer experience therefore become vital to the success of the brand. But this is a complicated discussion - what do you think?!

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Comments (21)

  • As Rich Rebuilds on YouTube has found out the after service from Tesla to a local garage is non helpful so he gave up recently and decided to LS swap a Tesla as he was fed up of being told he couldn't have access to parts easily so chose a motor and drive system he could get parts for easily.

    Direct to customer sales happens a lot in the industry I am in as well with garden machinery and the online sellers of machinery not sold in dealers will not offer assistance or trade sales to dealers and repair shops and only assume that the customer will be buying the parts directly from them and fixing the machine themselves. 90% of the time the customer will give up and the machine ends up in the bin.

    This is what worries me with electric cars, if they don't provide assistance to garages or have a dealer and service centre people will just throw away their broken electric car and buy another one, pretty much like a smartphone or washing machine.

      2 months ago
    • This is going to be a major crisis if that scenario isn't thought about ahead of time and soon. We need to be able to recycle, effectively, EV's. Repair is critical. Shops have to be able to repair vehicles. Not everyone can afford to buy new. I...

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        2 months ago
    • One thing I have noticed where I live is that about 2 or 3 years ago I used to see loads of the old shape Nissan Leaf's but now they are hardly to be seen. Now you would assume you would see more of these being passed on to new owners second hand but I...

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        2 months ago
  • Booooo

      2 months ago
  • It’s a dumb law. It puts too much control with the manufacturer and makes repairs annoying. It only helps the people on top.

      2 months ago
    • how so? Under the law, manufacturers can NOT sell directly, but are forced into a network of competing dealers. Which then set prices and levels of service. There are more dealers than manufacturers, and a dealer is not limited to a single...

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        2 months ago
  • Direct sale is the most consumer-friendly and cost-saving business model in the industry. Banning it only means the dealers are desperate for profiteering.

      2 months ago
  • It’s not a bill against EVs, it’s a bill to save the future of car dealerships. They are an important part of the economy in many towns and cities across the US. If other brands eventually follow suit with Tesla’s model, it would be the end of it all, costing tons of jobs to satisfy a small group of shareholders.

      2 months ago
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