News & Politics

Michigan Governor Signs Bill Dictating How Car Companies Can Sell Cars

Photo by the Detroit Regional Chamber

The Republican Party likes to bill itself as the party of free enterprise.  In theory, the GOP opposes regulations on how businesses conduct themselves unless it deals with things like fraud.  Of course, that’s just how they operate in theory.  In reality, it’s something very different apparently.

Republican Gov. Rick Snyder signed a bill yesterday that requires Tesla to use dealerships rather than their direct-sales business model.

Governor Rick Snyder signed bipartisan legislation Tuesday aimed at discouraging Tesla Motors from selling its electric cars directly through company stores.

House Bill 5606, sponsored by state Rep. Aric Nesbitt, also prohibits auto manufacturers from dictating fees franchised dealers can charge customers. The legislation allows individual auto dealers to make the business decision whether to charge the transaction fee.

Snyder said direct sales of new vehicles is already banned in the state. This law will explicitly require all automakers to sell through a network of franchised dealers.

Earlier Tuesday, General Motors urged the governor to sign the bill.

Snyder, who has boasted of making Michigan more hospitable for entrepreneurs, brings Michigan into a growing number of states that have raised obstacles to the California-based electric car company.

And now, Snyder has proven he’s more interested in appeasing a company like General Motors than allowing anything close to industry innovation.

Tesla was using a new idea for auto sales, essentially cutting out middlemen in an effort to try and keep costs for its electric cars low.  Whether it would work or not remains to be seen, but that’s where the free market shows the harsh reality.  Not every idea is going to be a winner, and the market will figure that out.

Of course, Snyder isn’t trying to keep Tesla safe or anything.  He and politicians like him are trying to keep an age-old model viable whether it deserves to be or not.

The problem is that no business model deserves to be protected.  If dealerships are an awesome way to sell vehicles, they’ll survive just fine.  If they are outdated, then they won’t.  That’s how the free market works.

However, Republicans like Snyder may espouse free market principles, but they don’t really believe them.  Snyder, in particular, has shown that while he may want to make Michigan more friendly for entrepreneurship, he’ll sell out entrepreneurs in a heartbeat if their innovations threaten his contributors.

You don’t get to play free market advocate when your actions make it clear you’re no such thing.