Greg Gardner

Detroit Free Press

A Tesla Motors executive said today that Michigan's denial of the electric car maker's license to sell cars directly to consumers won't help a future bid by the state to attract a Tesla assembly plant.

Diarmuid O'Connell, Tesla vice president of business development, spoke Thursday morning at the World Mobility Leadership Forum at the Westin Metro Airport. He said Tesla has dozens, "if not hundreds of suppliers" in Michigan, including a tool and die operation in Grand Rapids, but that didn't help its effort to get a retail license.

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Tesla so far has sold luxury electric cars ranging in price from about $70,000 to $125,000. But by late 2017, cofounder and CEO Elon Musk has promised to launch production of a new Model 3 that will be priced at about $35,000.

About 400,000 people have given Tesla $1,000 deposits for that car. If the company produces that many cars it may need to build a second assembly plant to augment its sole plant in Fremont, Calif.

"When we have negotiations with legislators, we don't promise something in a disingenuous fashion," O'Connell said. "But it's also true that a state that doesn't allow us to engage in our core business, which is selling and servicing our vehicles, is a very poor candidate for a manufacturing operation in the future.

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"It's very unfortunate that residents of Michigan who own our cars have to drive to Ohio or Illinois to have their cars serviced,"

Last week, the Palo Alto, Calif.-based electric carmaker sued the state after Secretary of State Ruth Johnson and an administrative panel denied the company's application for a license to sell directly to consumers.

There are about 260 Tesla galleries or retail locations in the U.S., but none is operated by a franchised dealer. In the Great Lakes region, there are four locations in metropolitan Chicago and one each in Indianapolis, Columbus, Cincinnati and Cleveland.

Gov. Rick Snyder said Wednesday that Michigan is still open to working with Tesla if it agrees to sell through franchised dealers.

But direct sales remains an essential element of Tesla's business strategy.

"We didn’t get into this to upend the franchise dealer system," O'Connell said. "We're in the business of launching new technology and Michigan, as the birthplace of the industry, should be in the vanguard of that movement."

But with heavy lobbying by the Michigan Automobile Dealers Association and General Motors, the Legislature has not welcomed the upstart electric vehicle maker.

In describing one particularly hostile encounter, O'Connell recounted one unnamed legislator who told him, "the dealers don't want you in Michigan. Automakers don't want you in Michigan. So you won't be in Michigan."

"It was like a 'Godfather' moment," O'Connell said.

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Michigan isn't the only state that has put up barriers to Tesla, but nearly all states along the East Coast and the West Coast have welcomed the direct-sales model.

Contact Greg Gardner: 313-222-8762 or ggardner@freepress.com. Follow him on Twitter @GregGardner12