The Tesla Motors Inc (TSLA) Ban Continues

tesla motorsShare price of Tesla Motors Inc (NASDAQ:TSLA) dropped 1.8% to $231.10 on Oct 22, after the Michigan governor signed a legislation banning direct car sales by automakers in the state.

The law mandates that new vehicles need to be purchased from dealerships.

According to Tesla, enforcement of this law will adversely affect consumers in the state as the dealers will increase the price of the vehicles.

Auto dealers are mainly supportive of this law.

They believe that if automakers directly sell their vehicles, they will use their power to sell vehicles at lower prices than their independent franchisees.

They consider that this will adversely affect the independent franchisees.

On Oct 1, the Michigan Automobile Dealers Association successfully passed a HB5606 bill.

This bill is an amendment to the existing law, designed to make sure that car dealers can take additional fees for all vehicles sold in Michigan.

The bill also seeks to ban Tesla from operating a gallery in Michigan. According to the company, this gallery only provides information about their vehicles without any involvement in sales.

Tesla also faced sales restrictions in New Jersey and Missouri.

The new regulations in New Jersey banned the direct sales of vehicles by any automaker and necessitated the use of middlemen.

Thus, Tesla’s sales will be restricted in New Jersey and its existing retail licenses will be cancelled.

In Missouri too, the legislators banned the direct sales of vehicles to the public.

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