Ward: Tesla innovation is good for Michigan
The buzz out of the North American International Auto Show in Detroit was all about innovative automotive technology like autonomous driving cars and electric vehicles.
Detroit’s Big Three car companies have, and will continue, to turn heads. Electric vehicle (EV) manufacturer Tesla Motors is another company turning many heads.
Tesla has been producing the 100 percent EVs Model S luxury sedan since 2012 and added the Model X crossover SUV last year. The vehicles have drawn high praise and recognition for their technology, performance, aesthetics, travel range and overall innovation.
However, if Michigan consumers want to test drive or purchase a Tesla Model S or Model X they must go to another state to do so.
In 2014, Governor Snyder signed a bill making it illegal for auto manufacturers to directly sell new cars in Michigan, or even to operate service centers if Tesla owns them. The law requires all new cars to be sold through franchised dealerships. Even though Snyder signed the bill, he also issued a message stating, “A healthy, open discussion can and should be had over whether the current [automaker-franchised dealer] business model in Michigan should be changed,” and Snyder asked the Legislature to make this issue “a top priority.”
This Michigan law makes plans by Tesla Motors to open stores and service centers in Michigan illegal. Though they own and operate stores and service centers in more than 20 states and 35 countries, Michigan has placed this barrier to Tesla because they do not utilize independent franchisees. Each of these stores or service centers would bring dozens of jobs and several million dollars of investment.
Franchised dealerships may make sense for the Big Three and others, but Tesla is a small company – producing fewer cars in a year than GM does in a week. They make each car to order and don’t possess a pre-manufactured inventory of cars to sit on dealer lots. They’ve determined the economics of dealerships don’t make sense for them and would only drive up costs for their consumers.
In addition to electric vehicles, Tesla is becoming the worldwide innovation leader in the energy storage industry. They’re introducing the Tesla Powerwall for home and small business energy storage and Tesla Powerpack for utilities and industrial energy storage. These small, scalable and highly powerful battery storage systems have potential to revolutionize future energy utilization.
Tesla is already investing in Michigan. They bought a tool and die facility in Grand Rapids that is now called Tesla Michigan. The facility employs more than 100 people, and is in the process of expansion and hiring dozens more. Tesla also does more than $250 million worth of business annually with more than 50 Michigan parts suppliers.
Tesla is doing a great deal to lead the next chapter of automotive and energy innovation. If Michigan is to continue being a global innovative leader, we must open our doors to companies like Tesla. There is room for competition, which makes all of us stronger. It’s time for the legislature to heed the request of Gov. Snyder and lift Michigan’s ban on Tesla.
– Larry Ward is the executive director of The Michigan Conservative Energy Forum, an organization founded by conservatives who believe that Michigan should adopt a genuine “All of the Above” approach to energy policy.