
A Raw Deal in Michigan - lalwanivikas
http://www.teslamotors.com/blog/raw-deal-michigan
======
skrebbel
_Using a procedure that prevented legislators and the public at large from
knowing what was happening or allowing debate, Senator Joe Hune added new
language in an attempt to lock Tesla out of the State. Unsurprisingly, Senator
Hune counts the Michigan Automobile Dealers Association as one of his top
financial contributors, and his wife’s firm lobbies for the dealers._

In the Netherlands, we call this corruption.

(It happens too, but so openly? Don't you guys have rules against this? Or
media who like scandals?)

~~~
wiremine
I live in Michigan, and was dishearten when I read about this story the other
day. But not really that surprised.

A few observations:

\- Tesla isn't a name brand here like Ford or GM. In fact, if you asked a lot
of people if we should help the Big Three with this sort of legislation, you
might be surprised by the answer. Remember, they generate a LOT of jobs in
this state: not just the Big Three, but the tier 2 and tier 3 manufactors.
While I think logic would win out in the day, I wouldn't assume that everybody
in Michigan _wants_ Tesla. It isn't in their best interest.

\- I haven't seen one media story about this yet, outside of social media.

\- We're in the middle of an election cycle year, including a gubernatorial
race. So, the special interests picked a good time to insert this language:
there are a lot of problems the state is still dealing with, including Detroit
going through bankruptcy. And people want the money to win races.

Personally, I'd love to see Telsa in the state, both the cars and charging
stations. But, honestly, Telsa isn't going to get much traction here until
they improve cold weather battery performance.

~~~
clarebear
My retired father-in-law who lives in a suburb of Detroit got a car that was
not manufactured by the by the Big Three a couple years ago. He felt so much
social pressure that he quickly returned it and got one that was. He told me
that some "foreign" cars would be egged in his neighborhood. I put foreign in
quotes, as big three cars are not always manufactured in the US and sometimes
other cars are manufactured here. But if you are from Detroit, where the
headquarters is and the profits go back to matters most, and tangibly matters.

~~~
phurley
I live in a Detroit suburb, a large number of the residents here are
engineers, many for GM, Ford and Chrysler, but quite a few for Toyota, Hyundai
and other foreign suppliers (like Bosch and Yazaki). I see many domestic, but
almost as many imports here.

I think a lot of the stigma is gone, certainly there is considerable pressure
for people to drive their employers vehicle to work, but at least in my
(relatively upscale) neighborhood, I would feel no social pressure against,
and I bet I would have a bunch of engineers come visit, if I dug up a 100k and
put a Tesla in my driveway.

~~~
zenocon
Agree. I worked for one of these three companies for a span. While I was
there, they _did_ have a rule that if you're not driving their car, you can't
park it in the covered parking lot. That was the extent of the backlash, and
I've lived in this area most of my life. I think a lot of these stories and
anecdotes about tires getting slashed, and people being harassed for driving
foreign are not accurate today.

~~~
67726e
I think part of that might be the crowds you hang with. I would expect petty
vandalism more from blue collar types than I would engineers and other
professional types.

------
danielhunt
As an outsider, it really is difficult to understand why these practices are
supported/allowed by the public. Is this information even _available_ to
people outside of the tech community?

What in the hell is wrong with US politics* that allows for this to happen so
blatantly, and so regularly, without any repercussions at all?

* I'm aware that it's not (in general) a US-only problem, but for Tesla and the car dealership world, it seems that this is a real problem

~~~
CalRobert
This may get me downvoted, but I think the problem has more to do with the
voters than the politicians. If people took the time to research candidates
and issues independently instead of voting for whoever had the loudest ads, we
might not see so much money in politics.

Also, they're lazy and they don't care. Nerds on HN do, but talk to normal
folks and they just. don't. care. about much of anything political, and they
use their horribly inadequate math skills and emotion to make decisions,
instead of reason.

~~~
TeMPOraL
I'm first to call out all the bullshit general population believes in, but in
this case I think it is counterproductive to blame people.

Behind all politicians there is a system designed to optimize for deceiving
the electorate into believing what the politicians want. Millions if not
billions of dollars and man-hours are spent every year to improve that system
(that's not counting the private research branch known as advertising
industry). Your average citizen Joe doesn't stand a chance here.

The fact that general population doesn't care about important issues (hint:
what's on the news is mostly irrelevant) is a different thing and it hurts me,
but I have no clue what we can do with it.

~~~
CalRobert
But the electorate could at least do some simple mathematics and rudimentary
cost-benefit analysis. Why does the US spend disproportionately more
addressing (supposedly) terrorism than it does road safety? Why do people fear
crime when it's at historically low levels? Why can politicians get elected by
making economically, or even mathematically, impossible promises? I think that
at some point you have to consider whether the voter is complicit in the
situation the US is in by being wantonly, even willfully, ignorant.

------
Al__Dante
I think this might be the relevant change (contained in bill S-1 which was
substituted in the Regulatory Reform Committee):

"2 (i) Sell any new motor vehicle directly to a retail customer 3 other than
through <del>its</del> franchised dealers, unless the retail 4 customer is a
nonprofit organization or a federal, state, or local 5 government or agency.
This subdivision does not prohibit a 6 manufacturer from providing information
to a consumer for the 7 purpose of marketing or facilitating the sale of new
motor vehicles 8 or from establishing a program to sell or offer to sell new
motor 9 vehicles through the <del>manufacturer's</del> FRANCHISED new motor
vehicle 10 dealers THAT SELL AND SERVICE NEW MOTOR VEHICLES PRODUCED BY THE 11
MANUFACTURER."

Link to the passage of the bill:
[http://www.legislature.mi.gov/(S(zkgdwb45ddzp3imtvsszat55))/...](http://www.legislature.mi.gov/\(S\(zkgdwb45ddzp3imtvsszat55\)\)/mileg.aspx?page=BillStatus&objectname=2014-HB-5606)

Link to the substitute bill:
[http://www.legislature.mi.gov/(S(zkgdwb45ddzp3imtvsszat55))/...](http://www.legislature.mi.gov/\(S\(zkgdwb45ddzp3imtvsszat55\)\)/documents/2013-2014/billcurrentversion/House/PDF/2014-HCVBS-5606-14800.PDF)

~~~
spacefight
Setup 100% Tesla-owned franchise. Sell through that.

~~~
howeyc
I'm not sure you can do this. Isn't the point of the franchise that it's owned
by someone else?

For example, if McDonald's corporate opens a location owned by them, can they
called it a "franchise" location?

~~~
twosheep
I think you can have it owned by a different company but with the same
leadership as the parent. Isn't this how liability shields work? Lots of
different LLCs with the same people at the helm?

~~~
cowsandmilk
It is easy enough to define franchise as having different control than the
parent. This is fairly standard. In fact, the bill has some language about
franchises not being acquired, owned, or controlled by a manufacturer or any
entity in which the manufacturer has a 45% ownership interest.

------
minimax
The State of Illinois would like to extend a warm welcome to the people of
Michigan, and invite them (and their tax dollars) to visit one of the several
Tesla stores in the Chicago area.

------
jstalin
Just called the governor's office and the lady answering the phone was quite
nice. I urge all other residents of Michigan to do the same.

------
RankingMember
FYI: Here's a direct link to the web form for sharing your opinion with the
Michigan governor's office:
[https://somgovweb.state.mi.us/GovRelations/ShareOpinion.aspx](https://somgovweb.state.mi.us/GovRelations/ShareOpinion.aspx)

------
khaki54
As a Michigan native (though long gone) and someone erring on the side of
conservatism, this is just a disappointment all around. Michigan is
historically manufacturer friendly - to a fault, so they really went out of
their way here.

Eventually all of these statutes will probably be stricken down due to the
commerce clause... you are buying the vehicle direct from another state,
therefore it's interstate commerce.

~~~
smackfu
Manufacturer friendly, or Michigan-based manufacturer friendly?

------
anigbrowl
_By striking a single, but critical, word from MCLA 445.1574(14)(1)(i), the
law governing franchise relations in Michigan, the dealers seek to force Tesla
[...]_

Well, don't tell us what it is or provide any links to it... /eyeroll. I
believe their complaint is about line 3 on page 6 of the following document:
[http://www.legislature.mi.gov/documents/2013-2014/billengros...](http://www.legislature.mi.gov/documents/2013-2014/billengrossed/House/pdf/2014-HEBS-5606.pdf)

I support Tesla's efforts and deplore the legislative pandering to incumbent
industries, but drumming up support for a legal/political conflict without
articulating the actual issue is counter-productive. All that happens is that
people send emails or make phone calls to the legislative body saying they're
outraged, and then get fobbed off with technicalities because >95% of the
outraged people don't actually know what they're complaining about, they only
know one party's assertion of what the downsides will be. If you want an
internet army to go into battle for you, arm them properly with the facts.

------
smoyer
Does anyone else get the sense that the Tesla Legal and Public Relations
departments are starting to have fun attacking the politicians who push these
bills through? The wording feels different than most corporate press releases.

------
hippich
When I hear about Tesla not being able to sell directly to customers, and have
to go through dealer, I always wondered why different corporate structure can
not be created, where some head company owns Tesla and all dealerships used to
sell Tesla cars? This way it is not manufacturer selling these and control of
the distribution is still within parent organization.

~~~
ceejayoz
IIRC in many states dealerships are required to have independent ownership
from the manufacturer and no individual/company can own more than one.

~~~
hippich
Is there some sort of test tho? I.e. what I was proposing - dealearship could
be separate company and owned by head corporation, which in turn owns Tesla
itself. So dealership is separate entity and not directly controlled by Tesla.

------
saturdaysaint
The funny thing is that Michigan's legislature is run by yokel conservatives
who made a big show of becoming a "right to work" state (i.e. making it
illegal to have mandatory all-union workplaces) - when corporate interests and
Fox News talking points were at stake, they were remarkably eager to thump
their chests about free association.

~~~
jdpedrie
wut? in what world does "free association" equal "mandatory all-union
workplaces"?

Just your words.

~~~
mikeash
In what world (just your words) does his comment equate the two?

------
Someone
Harsh statements, but no facts from objective sources. Looking for that, I can
find stuff from 'the other side' at
[http://www.legislature.mi.gov/(S(ejuo53qtuul1s2fn2o4sa255))/...](http://www.legislature.mi.gov/\(S\(ejuo53qtuul1s2fn2o4sa255\)\)/mileg.aspx?page=GetMCLDocument&objectname=mcl-445-1574)
where if I reading this right (aside: 'interesting' reuse of "(i)" as both
ninth letter of the alphabet and Roman numeral) section i reads

 _" (1) A manufacturer shall not do any of the following:_

 _(i) Sell any new motor vehicle directly to a retail customer other than
through its franchised dealers, unless the retail customer is a nonprofit
organization or a federal, state, or local government or agency. This
subdivision does not prohibit a manufacturer from providing information to a
consumer for the purpose of marketing or facilitating the sale of new motor
vehicles or from establishing a program to sell or offer to sell new motor
vehicles through the manufacturer 's new motor vehicle dealers."_

, but that text isn't recent (see the history at the bottom).

What exactly did they change and what were the arguments?

~~~
staffordrj
Here's a diff of the changes
[https://www.diffchecker.com/idjdre6n](https://www.diffchecker.com/idjdre6n)

------
canvia
The state Senator responsible for this is up for election in 2 weeks. This is
his opponent and she accepts donations:
[http://www.voteforshari.com/](http://www.voteforshari.com/)

------
navait
Elon musk has so much money, why can't he just be his own lobbyist instead of
getting his fanboys on this. I have no stake in this.

~~~
mzzk
If you live in America, you have a stake in this.

~~~
navait
I don't buy new cars.

------
jstalin
Here's a follow-up article on the issue from today. Some are claiming that
Tesla direct sales are already illegal in Michigan:

[http://www.mlive.com/lansing-
news/index.ssf/2014/10/tesla_di...](http://www.mlive.com/lansing-
news/index.ssf/2014/10/tesla_direct-to-consumer_sales.html)

------
ams6110
Michigan is in the toilet. Detroit is bankrupt, huge parts of the city are
abandoned ruins, and the rest of the state isn't much better off. Tesla
probably would not sell many cars there anyway. If I'm wrong, it's a good
opportunity for northern Indiana or Ohio to court a Tesla store.

~~~
mikeyouse
> If I'm wrong

You are.

The suburbs of Detroit are some of the wealthiest zip codes in the country,
much of the Western coast is filled with beach towns and million-dollar lake
houses, the HQs of dozens of multi-billion dollar business are there, and
Michigan is the 9th most populous state in the US. Tesla would sell plenty of
vehicles there.

------
Shivetya
Honestly Tesla, STAY OUT OF MICHIGAN.

If you refuse to do business with the state, go as far as to discourage people
living there form buying them, eventually there could be enough public
pressure to bring about a change.

If not that, perhaps a few billboards equating the politicians to Neanderthals
might work

Its time to ignore the states that refuse to play fair, shame them, and
perhaps their voters will wake up.

~~~
brk
At this point in time, Tesla is still less than a rounding error on automobile
sales. Ignoring potential markets and counting on the public to "do the right
thing" would seem like a suicidal strategy to me. Do you have examples of
where this approach has worked?

------
cellis
Tesla wants to have its cake and eat it too. You can't take a 500 million loan
from taxpayers ( the vast majority of whom _DON 'T_ benefit from and can't
afford your product ) and then on the other hand claim unfair treatment by
local governments.

~~~
enraged_camel
Maybe you're forgetting that the auto industry received bailouts that were
_two orders of magnitude greater_ than the loan that Tesla took from the
government. And, unlike the rest of the auto industry, Tesla paid back its
loans, and did so ahead of time.

~~~
cellis
First, that's kind of a strawman. I didn't say that GM's bailout was a good
thing, only that Tesla has also taken money from the government ( at its most
dire time, I might add; had they not received those loans they'd have been
insolvent for sure ). And second, even though Tesla paid back its loans, it
doesn't mean the taxpayer benefitted at all from the transaction. Au
contraire, by paying back the loans early, Tesla avoided granting the
government shares of TSLA, and thus stiffed the taxpayer out of any possible
return. I understand everyone in SV wants Tesla to succeed, but it's not the
most meritocratic, little-upstart-vs-entrenched-player story their PR would
like you to believe.

~~~
enraged_camel
>>I didn't say that GM's bailout was a good thing, only that Tesla has also
taken money from the government ( at its most dire time, I might add; had they
not received those loans they'd have been insolvent for sure

Just like the car companies, who were also bailed out at their most dire time.
Except the car companies declared bankruptcy anyway due to gross mismanagement
and horrible business practices. From wikipedia: "In September 2008, the Big
Three asked for $50 billion to pay for health care expenses and avoid
bankruptcy and ensuing layoffs, and Congress worked out a $25 billion
loan.[85] By December, President Bush had agreed to an emergency bailout of
$17.4 billion to be distributed by the next administration in January and
February.[86] In early 2009, the prospect of avoiding bankruptcy by General
Motors and Chrysler continued to wane as new financial information about the
scale of the 2008 losses came in. Ultimately, poor management and business
practices forced Chrysler and General Motors into bankruptcy. Chrysler filed
for chapter 11 bankruptcy protection on May 1, 2009 [87] followed by General
Motors a month later.[88]"

>>And second, even though Tesla paid back its loans, it doesn't mean the
taxpayer benefitted at all from the transaction.

There are an incredible number of government-business transactions that the
taxpayer does not directly benefit from. In Tesla's case, I'd argue that the
benefits were actually there. You may not be able to afford one of their cars,
but having a high-tech electric car company enter the market and succeed
against well-entrenched incumbents is in everyone's best interest. You may
disagree but I think you'd (fortunately) be in the minority.

------
briandear
But this really comes down to voting. Why does a better funded candidate win?
Because a TV ad convinced some idiot to vote for that candidate? I see
informercials and "work from home and make millions" scams all the time. But I
don't buy the product whatever it might be. Yet voters seemingly are
completely ignorant. So candidates who are well funded by special interests
end up winning. But often these anti-competitive practices are in primarily
Democrat controlled areas. Uber is a great example: Austin, DC city councils
for example are entirely Democrat and thus beholder to "labor" and anti-
competitive practices. This isn't exclusively a democrat practice, however
much of the time it is. The NY and San Francisco war against AirBnB for
example is about collecting more taxes. The anti-competitive closed-shop
system is entirely democrat supported. The endless taxes and regulation of
business is a democrat obsession. Certain national democrats sometimes go
against the trend, especially the tech-oriented. But the boots on the ground
Democrats are especially prone to anti-competitive tendencies. Protectionism
is a hallmark of the AFL-CIO and they completely support (and significantly
fund) the Democrat party. I'm not saying "Republicans are good," there are
plenty of shit Republicans, however philosophically, Democrats are anti-
competitive by nature because the concept of the free market goes against
their core values of so-called 'economic justice.' Honestly ask yourself, if
this Tesla decision were in the hands of Rand Paul or John Conyers, who would
be more likely to support the free market in this situation? Would Ronald
Reagan be more likely to support Tesla that Obama? Almost certainly, based on
their records. Obama for instance through his supporters on the NLRB have
opposed companies such as Boeing to build non-Union factories -- which is in-
effect the same thing we have with Tesla -- an attempt to maintain a type of
monopoly and artificially constrain the free market in order to serve a
specific narrow group of voters and interests. That's what's happening here:
the auto dealers, just like the AFL-CIO did with Boeing, are attempting to
artificially protect their monopoly position, to the detriment of the
population as a whole. I know this comment won't win me many friends here, but
I hope that everyone at least researches guys like Rand Paul -- not the
propaganda (in either direction) but what he actually says and stands for. If
we can get more politicians like him, then perhaps we can start to realize
that we can have freer markets, more personal freedoms and perhaps a
government that knows when to get out of the way (and knows when to get in the
way.) If anyone has the time or the inclination, read the book 'Economics in
One Lesson.'

~~~
_delirium
The politician called out by name here, state senator Joe Hune, is a
Republican. The Republican Party also controls the legislature that passed
this bill: they hold a supermajority (68%) of seats in the Michigan Senate,
and a majority (54%) of seats in the Michigan House. And, the governor is a
Republican. So I doubt the explanation for this case, at least, can be laid
specifically at the feet of the _Democratic Party_ trying to restrict trade.

