LANSING (WWJ) – Gov. Rick Snyder has put his signature on a bill that would keep electric car maker Tesla from selling its vehicles in Michigan.

The governor says this strengthens Michigan’s franchise laws that require all vehicles to be sold at independent dealerships.

“Based on our research, it doesn’t change current law it all,” said Snyder. “It only strengthened existing language.”


VIDEO: Governor Snyder’s YouTube Statement.

The law was backed by car dealers, who have said that Tesla would have an advantage if they were allowed to sell vehicles directly to the public. Tesla had said that it was too small to set up its own franchise network.

“I’m not surprised,” said AutoTrader.com analyst Michelle Krebs. “Governor Snyder is heavily backed by business leaders, which include car dealers and auto companies as he runs for re-election.”

Just hours before the governor signed the new law, General Motors came out in support.

“We believe that House Bill 5606 will help ensure that all automotive manufacturers follow the same rules to operate in the State of Michigan,” read a statement from the company.

Tesla had called the stricter law a “raw deal.”

“The dealers seek to force Tesla, a company that has never had a franchise dealership, into a body of law solely intended to govern the relationship between a manufacturer and its associated dealers,” read a Tesla blog post. “In so doing, they create an effective prohibition against Tesla opening a store in Michigan.”

There are fewer than a hundred Tesla’s registered to Michigan owners. All were purchased out of state. While Michigan was not expected to be a large market, it would have been symbolic to have a dealership in the heart of the traditional auto industry.

But AutoTrader.com’s Michelle Krebs sees the issue as something that involves more than just one small volume carmaker.

“This whole issue about direct selling by automakers to consumers is not just about Tesla. Automakers and dealers are worried that foreign automakers–like ones from China perhaps–will set up shop and skirt the franchise laws.”

Governor Snyder, in signing the bill, said that this should not be the end of the discussion about new ways of selling vehicles to the public.

“I would be open, and actually encourage a discussion to make sure Michigan’s a state that’s open to products and services from all over the globe.”

Connect with Jeff Gilbert
Email: jdgilbert@cbs.com
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Twitter: @jefferygilbert
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