Halting Progress: Michigan’s Ban on Direct-to-Consumer Auto Sales

Author: Jon Kelly, Associate Member, University of Cincinnati Law Review

The cost of filling up at the gas station is an unsavory ritual for most drivers. So it should be no surprise that the concept of the electric car has been resuscitated over the last decade. However, electric cars have seen limited success in the U.S. auto market due to the underdeveloped state of the technology. Tesla is one company seemingly poised to turn the tide on electric car sales, and its newest model would likely be a viable competitor with gasoline powered cars. Tesla has adopted a “direct to consumer” sales model, as opposed to the traditional franchise-dealership model employed by other car companies. Michigan is the most recent state to pass a bill (H.B. 5606) prohibiting car sales under the “direct to consumer” model. However, H.B. 5606 enforces a business model that does not work for electric cars. Michigan should repeal H.B. 5606 and allow Tesla at least some access to Michigan. H.B. 5606 creates an unwarranted barrier to entry in the automotive market and threatens to limit consumer access to competitive products and innovative technology.

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