America’s motor state going the wrong way on direct sales
For most of my life, the Detroit area has been the epicenter of the domestic automotive world. Unless you are the sort of person who experienced a fainting spell when the National Corvette Museum in Kentucky dropped eight historically precious Corvettes into a big sinkhole last winter (including the one-millionth model ever produced) you probably still get most of your interesting domestic car news from Michigan.
I have a friend who has been saving for a while for a Chevy pickup, her dream vehicle. Her dad and other family members drove Chevys, and it’s embedded in the family culture. A lot of my neighbors without a firm brand allegiance lust instead after the new Tesla electric vehicle that changed most everybody’s idea about what an electric car could provide in the way of thrills more traditional to the driving culture than the cultures of saving money or saving the environment.
Several years ago, I was seated at a business next to the CEO of a business that made car parts. His opinion was that American companies were the slowest to innovate of all the major car companies in the world. That was largely before cars were built in pieces all over the world, which began the erosion of the “domestic content” rules that now are mostly impeding foreign sales by American solar energy industries. But that’s a topic for another day.
The Tesla is very innovative. It may even be a game changer at some point. It offers style, exciting driving and a low-impact on the environment, all in one. Oh yes, and it comes with a new direct-to-consumer marketing strategy as well! Ooops, maybe not in Michigan.
The forces aligned against disruptive ways of satisfying consumer demand have gotten, in the space of a couple days, an amendment into a bill that passed both houses and is sitting on the governor’s desk. The amendment prohibits Tesla — in the largest state in which company doesn’t yet have a sales office — from selling directly to its prospective customers. The company has said it had been discussing an approach to sales in Michigan with political leaders in the legislature and appropriate government agencies, until the amendment was adopted and voted on with great alacrity by the General Assembly.
There was never any public debate, and news reports suggest that most members of the legislature were unaware of the impact until the auto dealers started thanking them for their votes. That is, for voting to protect Michigan customers from having more choices about what to drive.
We’ve seen a lot of this lately. It’s just plain bad faith by lawmaking bodies to not at least host some discussion on a law that puts a death sentence on what appears to be a perfectly reasonable business model. If signed by Gov. Rick Snyder, sales of a shiny new consumer product will be impossible in Michigan unless the company decides to sell through traditional dealerships. It is difficult not to notice that these middlemen are third parties that are very active politically, in what was supposed to be a pretty close election for governor this time.
When I worked in the legislature years ago, it used to be considered normal that if your side had the votes on a bill, you were at least accommodating enough to let the opposition make their case before you enacted new requirements or prohibitions. The public is well served by debate. Yet we have seen less and less of it on most of the things that matter. Even the famous cut-and-paste job that has become the federal health insurance law was accompanied by extensive public debate before the final version was sewn together.
Apparently the only part of the process that Tesla was able to engage was a conversation with the governor’s office after the bill passed. The intended election year pressure is now fully upon the governor. We will see next week whether he decides to stick with his philosophy on how markets work best for his constituents, or is forced to bow to special interest politics.
I doubt if this innovative, named for one of the greatest scientists who ever lived, can be stamped out with the rearguard action by Michigan dealers. But it can surely be inhibited by the wrong decision from the state’s leadership.
