Michigan's EV Policy: Deceptive or Necessary Protectionism?

The latest reporting suggests that Michigan is trying to limit the growth of electric vehicle (EV) companies. However, the reality of the situation is more nuanced than this headline might suggest. This piece aims to clarify the context and implications of these claims.

House Bill 6233, 2020: Clarifying the Legislation

Michigan's House Bill 6233, passed in 2020, is an amendment to existing dealership protection laws. This bill specifically targets new electric vehicle manufacturers, but only in scenarios where they seek to sell directly to consumers. The existing law was already quite restrictive, especially for Tesla, as it forced Tesla to sell cars indirectly through independent dealerships. Tesla pursued a legal challenge and ultimately reached a settlement that allowed them to demonstrate and deliver cars but not sell them in facilities they did not own. In practice, buying a Tesla in Michigan means ordering online, paying online, and picking up a California-registered car at the Tesla gallery in Michigan.

Impact on New EV Manufacturers

The new law would place significant disadvantages on new EV companies that intend to sell directly to the public. This is a unique situation, as existing gasoline car manufacturers do not face similar restrictions. Nor do they have the same level of direct-to-consumer sales as Tesla currently enjoys. If this bill applies to any new manufacturer, it will be an EV company, driven by the need for direct customer interaction and service.

Similar Prohibitions in Other States

It's worth noting that many other states have similar laws that restrict direct sales and service by manufacturers. This trend has implications for not just Michigan but the broader automotive landscape. These restrictions could stifle innovation and market entry for new EV companies.

Revenue Streams and Auto Industry Protectionism

Michigan's primary concern is likely its substantial revenue streams from the auto industry and its supporting sectors. If markets shift towards electric vehicles, Michigan risks its economic base. By upholding such dealership laws, Michigan is essentially protecting its current economic model rather than adapting to future changes.

Conclusion: Short-sighted Protectionism

The protectionist stance adopted by Michigan, while understandable in the context of preserving a traditional industry, is ultimately short-sighted. As the world moves towards renewable energy and sustainable transportation, the auto industry will need to evolve. By obstructing the entry of new EV companies, Michigan may contribute to its own economic decline.

As the global economy continues to evolve, embracing change and fostering innovation will be critical. Michigan's current laws are a point of contention, but they reflect a broader debate about balancing economic stability and future adaptability.