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Tesla files lawsuit to sell vehicles in MI

Tesla files lawsuit to sell vehicles in MI

"The sole objective for applying (the law) to a non-franchising manufacturer like Tesla is to insulate Michigan's entrenched automobile dealers and manufacturers from competition", the Palo Alto, California, company said in the suit.

Tesla Motors has filed a federal lawsuit against MI legislators and governor Rick Snyder over the state's ban on direct sales to consumers.

"Unfortunately, the local auto dealers and local manufacturers have made clear that they oppose any law that would allow Tesla to operate in Michigan", Tesla's statement said.

Tesla on Thursday filed a lawsuit against MI officials in an effort to strike down a law that prohibits the company from selling vehicles directly to consumers in the state.

The Michigan Department of State last week denied Tesla's application for a dealer license to sell to consumers, citing the law, which is backed by big auto companies and their dealerships.

"Giving auto dealers a monopoly on vehicle sales benefits them, but harms consumers", said Tesla.

The lawsuit was filed less than a week after Johnson rejected Tesla's application for dealership and service facilities in Grand Rapids.

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In the complaint, Tesla said its direct sales model is the "only viable means" for selling its electric cars because the traditional dealer model - which incentivizes "high-pressure, high-volume sales at the highest negotiable price", with add-ons and surcharges - would be a "disastrous way to bring Tesla's novel cars to market".

"The governor is always willing to review legislation presented to him if the state Legislature feels a change in the law is necessary", he said.

Nationwide, various states have taken different approaches to Tesla's efforts to set up customer-direct retail centers, with some states seeking to ban the practice entirely, some allowing exceptions with restrictions, and others not objecting to the practice at all. And while there was a chance Tesla might appeal the ruling, it instead sued the state of MI in federal court.

Tesla hopes to launch its Model 3 next year, a relatively affordable auto that gets more than 200 miles on a single charge. The Michigan Automobile Dealers Association didn't immediately return a call.

The dealers argue that the system is the most efficient and effective way to distribute and sell automobiles nationwide because independent dealers are more motivated to invest in their dealerships and are effective than manufacturers in selling cars. Tesla on the other hand, wants to have total control over the sales process including dealerships, showrooms, and customer relationship.

At most, the governor said in the statement, the new law "clarifies the existing requirement in MI law". Tesla also operates in 20 other countries.


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