Legislation in Michigan that would have removed an exemption for Tesla Inc. from the state’s ban on direct vehicle sales will not pass this year.
The Michigan Senate did not vote on the amended legislation, which passed out of the state House this month, before it wrapped up its two-year legislative term late last week. Any bills not passed before the end of the term are considered dead and must be reintroduced in the new year.
House Bill 6233 was introduced in September and backed by Michigan’s franchised auto dealers. As originally written, the bill would have codified into law an agreement between Tesla and the state of Michigan in January that resolves a federal lawsuit the company filed in 2016 against the state’s direct-sales ban.
The stipulation allows Tesla to operate its galleries in Michigan, though vehicle titles must be transferred in another state. It also allows Tesla to operate service centers indirectly through a subsidiary.
The original version of the bill was opposed by automakers, including General Motors and Ford Motor Co., which argued it allowed one company to operate under a different set of rules. Startup EV manufacturers, including Rivian, also opposed the bill, saying it would close off a path they saw in Tesla’s agreement with the state that could allow them to pursue a similar sales model in Michigan.
The Tesla-specific exemption to Michigan’s direct-sales prohibition was removed from the bill before it passed the House this month.
The Detroit News reported this month that GM, Ford and the UAW all worked to convince state lawmakers to pull the Tesla language. EV startups continued to oppose the revised version of the bill and said it would leave Michigan vulnerable to litigation.
The bill was scheduled to be taken up by a state Senate committee this month but was pulled from consideration.
State Rep. Jason Sheppard, a Republican who sponsored the bill, and Terry Burns, executive vice president of the Michigan Automobile Dealers Association, could not immediately be reached for comment Monday.