F Ford Motor Company

By Tim Higgins 

Officials in Michigan have rejected Tesla Motors Inc.'s request to open a company-owned dealership, a move that indicates the home state for Ford Motor Co. and General Motors Co. will stick to its ban on selling new cars directly to consumers.

The Michigan Secretary of State's office this week ruled against the Silicon Valley electric-car maker's selling vehicles in the state without using franchised dealers.

Gisgie Dávila Gendreau, a spokeswoman for the office, confirmed the state's decision Thursday in an e-mail.

Tesla has been seeking an application for a new auto dealership license in Michigan, one of several states to continue banning direct sales of automobiles by manufacturers.

"The license was denied because state law explicitly requires a dealer to have a bona fide contract with an auto manufacturer to sell its vehicles," Ms. Dávila Gendreau said.

"Tesla has told the department it does not have one, and cannot comply with that requirement," she added.

The Palo Alto, Calif., company filed an application last November for permission to open a dealership and service center in Michigan with the Secretary of State, which handles dealership licenses.

Tesla has for years been trying to steer around state franchise laws so it can set up its own retail locations, but it has faced intense resistance from franchise automobile dealerships and auto makers.

Dealership owners carry heavy sway among state lawmakers, often arguing the auto maker would unfairly cut out the middleman with a business model that involves selling directly to customers.

"At the urging of local car dealers and GM, Michigan law was changed two years ago to prevent Michigan consumers from buying cars from a Tesla store within the state," Tesla said in a prepared statement. "As part of the process of challenging the legality of that law, Tesla applied for a license in Michigan. Tesla will continue to take steps to defend the rights of Michigan consumers."

Previously, the company has said a formal denial in Michigan could prompt it to pursue additional legal avenues.

A hearing officer's decision may be appealed to the court.

The Detroit News earlier reported the ruling, which was dated Sept. 12 and followed a hearing held Sept. 7.

(END) Dow Jones Newswires

September 15, 2016 23:02 ET (03:02 GMT)

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