TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker or making a Paypal contribution here: paypal.me/SupportTMC

Tesla applies for Michigan dealership license

Discussion in 'News' started by gene, Jan 31, 2016.

  1. gene

    gene Active Member

    Joined:
    Feb 11, 2013
    Messages:
    1,023
    Location:
    Santa Barbara, CA

    Tesla applies for Michigan dealership license

    http://www.detroitnews.com/story/business/autos/2016/01/31/tesla-applies-dealership-license-michigan/79619370/

    Michigan Information & Research Service Inc., which first reported the Tesla applications, said that based on the Secretary of State applications in general, Tesla could contract with anyone to sell its cars, except itself.
    The Lansing-based capital news service argues the company could even send a former employee to open a Tesla dealership with a franchise agreement “in which it mandates the dealership look, act and do business exactly as the Tesla-run stores.”


     
  2. Chuq

    Chuq Member

    Joined:
    Jan 1, 2015
    Messages:
    736
    Location:
    Hobart, Tasmania, Australia
    I always assumed there was a good reason Tesla didn't already do this. I guess there isn't!
     
  3. Chickenlittle

    Chickenlittle Active Member

    Joined:
    Sep 10, 2013
    Messages:
    1,665
    Location:
    Virginia
    I believe there is a good reason not to do this. They correctly maintain there are no tesla franchises and so the car dealorship laws do not apply to them. Doing this undercuts that argument. I suppose this application could lead to court cases challenging this law and the new application could be to "buff up the application" so that there are no minor reasons to justify the denial.
     
  4. yobigd20

    yobigd20 Well-Known Member

    Joined:
    Oct 28, 2012
    Messages:
    5,793
    Location:
    Skaneateles, NY
    Tesla Applies For Dealership License In Michigan

    this is a step in the WRONG direction. "If approved, Michigan would soon become home to Tesla first dealership, which would have to be run by anyone other than Tesla itself, or, in other words, a typical franchise scenario in the state of Michigan."
     
  5. yobigd20

    yobigd20 Well-Known Member

    Joined:
    Oct 28, 2012
    Messages:
    5,793
    Location:
    Skaneateles, NY
    investors dont seem to like Tesla conceding to Michigan either. Tesla is down in premarket trading and Morgan Stanley just cut their target down to $333 from $450
     
  6. Krugerrand

    Krugerrand Active Member

    Joined:
    Jul 13, 2012
    Messages:
    4,298
    Location:
    California
    1) Tesla has always maintained a suggestion of going to a hybrid dealership type model for Model 3. This may be 'the' experiment for that. And with the suspected popularity of the Model 3, *we* definitely want Michiganers to be able to buy the Model 3.

    2) Tesla being down in premarket at this moment has less than zero to do with this Michigan application and everything to do with the manipulative Adam Jonas. Two days before ER, Mr. Jonas? So obvious.
     
  7. Chickenlittle

    Chickenlittle Active Member

    Joined:
    Sep 10, 2013
    Messages:
    1,665
    Location:
    Virginia
    i thought the ER is on the 10th
     
  8. flankspeed8

    flankspeed8 Member

    Joined:
    Dec 19, 2014
    Messages:
    645
    Location:
    Vermillion, MN
    I applaud them for doing whatever they need to do to beat the dealers at their own scorched earth game. Best case would be a ballot initiative, but doubt that would pass with heavy UAW opposition. They just need to get their foot in the door and the glass walls will tumble.
     
  9. timf

    timf Member

    Joined:
    Apr 14, 2013
    Messages:
    900
    Location:
    Michigan
    The only way this makes sense for Tesla is if they are either confident they will never be able to get the franchise law changed in Michigan, or they have found a way around it that does not impede their ability to open company-owned stores in the future should the laws change. Given the abrupt change in strategy, I would have to believe it's the latter. It may be that they are just going through the motions and have no expectation that the dealership application will be approved. It seems to have worked in Utah where they had their initial application denied but now are able to sell and service used cars and are ultimately on their way to getting the law changed.

    If Tesla can make things work with a captive franchise agreement that may be the far easier solution. A high-profile former employee such as Jerome Guillen would be the perfect candidate to run such an operation. It would require little change in operating structure other than in accounting. Cars would still be sold and serviced in an environment with no ICE affiliation. Customers would still order online and pay MSRP, but instead of sending final payment directly to Tesla it would instead be handled through the dealership company. Staff salaries and facility costs would be passed through via "wholesale" vehicle prices and other "kickbacks", but the operation would essentially be operated at a cost equivalent to what Tesla would pay if they were running things directly.
     
  10. eye.surgeon

    eye.surgeon Member

    Joined:
    Nov 18, 2014
    Messages:
    709
    Location:
    California
    I'm impressed that with hundreds of different market forces influencing the stock price today, you'e been able to discern that the Michigan situation is the cause of the stock price dropping.
     
  11. hockeythug

    hockeythug Active Member

    Joined:
    Jun 3, 2013
    Messages:
    1,499
    Location:
    Minnesota
    #11 hockeythug, Feb 1, 2016
    Last edited: Feb 1, 2016
    I'm sure the laws are different but in Minnesota Tesla is officially licensed as a "New Motor Vehicle Dealer". So in name only. Sounds like this is technically a dealership.
     
  12. Trev Page

    Trev Page Member

    Joined:
    Sep 21, 2012
    Messages:
    576
    Location:
    Aurora, Ontario, Canada
    #12 Trev Page, Feb 1, 2016
    Last edited: Feb 1, 2016
    I'm just curious, wouldn't Tesla's solution to the ban on sales in certain states be to create a "shell corporation" to be anointed as the franchisee? If that's all the states are demanding then why not game the system and go this route?

    In any case, it's probably a good move to apply for a license. If Michigan denies them a license then they can Lawyerup and sue the state.
     
  13. TNEVol

    TNEVol Member

    Joined:
    Apr 27, 2013
    Messages:
    187
    Location:
    Brush Creek TN
    In Tennessee and some other states they had to set up a subsidiary corp. as I understand it. The Michigan law prevented that approach. Careful reading of the article makes it appear that Tesla is setting up either legislation or litigation here. Application to the Secretary of State and rejection are procedural requirements. IMO this does not meant TESLA is changing their practice of no independent dealerships.
     
  14. slcasner

    slcasner Member

    Joined:
    Feb 20, 2011
    Messages:
    568
    Location:
    Sunnyvale, CA
    Right, that is my interpretation as well. It looks to me like InsideEVs may have misunderstood the action. Is there direct evidence that the dealership would be operated by an entity other than Tesla Motors?
     
  15. brucet999

    brucet999 Active Member

    Joined:
    Mar 12, 2015
    Messages:
    1,315
    Location:
    Huntington Beach, CA
    I think that article misinterprets what is going on. Tesla has applied for a permit to operate a company-owned store and repair facility using the only state application available for car sales and service; a dealership application. When Michigan denies the application, then Tesla will have standing to sue, with the end game of getting the law ruled unconstitutional.
     
  16. jbcarioca

    jbcarioca Active Member

    Joined:
    Feb 3, 2015
    Messages:
    1,311
    Location:
    Rio de Janeiro, Brazil and Coral Gables, FL
    On the face of it the Michigan law, and the others, are not unconsititutional although they are most certainly not in consumer interests. They certainly do serve car dealer interests and have their roots in the 'prarie populism' of the 1940's and after. It was easy to understand these laws when the car manufacturers held all the power. It is interesting how many hard core conservatives are backing the Tesla position. This is one of the most interesting battles of the day, isn't it?

    - - - Updated - - -

    On the face of it the Michigan law, and the others, are not unconsititutional although they are most certainly not in consumer interests. They certainly do serve car dealer interests and have their roots in the 'prarie populism' of the 1940's and after. It was easy to understand these laws when the car manufacturers held all the power. It is interesting how many hard core conservatives are backing the Tesla position. This is one of the most interesting battles of the day, isn't it?
     
  17. yobigd20

    yobigd20 Well-Known Member

    Joined:
    Oct 28, 2012
    Messages:
    5,793
    Location:
    Skaneateles, NY
    ***Actually most of the articles got it wrong.*** What Tesla did is apply to get a dealership license to open up a dealership and sell cars directly. Because of Michigan law that prevents manufacturers from selling directly, this application is going to get rejected (if it is granted then they do have the license to sell direct, lol). The purpose of them intentionally filing for a dealership license knowing full well that it is going to get rejected is to use it as evidence in a court case. So they are going to follow this license rejection up with a lawsuit. This is all part of Tesla's big plan to keep selling directly. Tesla's sales strategy remains they same: they will never have nor support a franchise network.
     
  18. green1

    green1 Active Member

    Joined:
    Mar 25, 2014
    Messages:
    4,116
    Location:
    Calgary, Alberta, Canada
    I believe these laws would be perfectly legal when dealing with companies and products entirely within their own borders, but I fail to see how any of these could be legal when dealing with products coming from other states if you consider the interstate commerce clause.
     
  19. doug

    doug Administrator / Head Moderator

    Joined:
    Nov 28, 2006
    Messages:
    15,914
    Location:
    Stanford, California
    I thought ER went off the air in 2009. Also, why blame Joe Adam Jonas?
    en-cual-de-las-4-fotos-joseph-adam-jonas-miller-se-ve-mas-gu-132517.jpg

    Please keep investor related conversations in the investor forum. Thanks! :)
     
  20. Joel

    Joel Active Member

    Joined:
    Mar 24, 2011
    Messages:
    1,164
    Location:
    Michigan
    Tesla Applies for Dealership License in Michigan - Fortune

    In a statement, a Tesla spokeswoman said:

    "As recently amended, current Michigan law prohibits Tesla from being able to license its own sales and service operations in the state. Submission of the application is intended to seek the Secretary of State’s confirmation of this prohibition. Once confirmed, Tesla will review any options available to the company to overturn this anti-consumer law."
     

Share This Page