Michigan Doesn't Allow Tesla Sales, But Keeps Buying More Tesla Stock

Michigan doesn’t want its residents to order a Tesla, but it sees no problem in owning $72 million in stock to bolster its state retirement fund.

According to The Detroit News, the Michigan Department of Treasury bought a further $48 million in Tesla shares in the second quarter of this year, boosting its stake to 339,623 shares — more than triple the amount it owned in March. Meanwhile, Michigan won’t budge on laws that prevent Tesla from selling vehicles in the state.

The State of Michigan Retirement Systems holds about $60 billion in funds to support the retirement pensions of state employees, as well as the police, judiciary, and education sectors. While the Tesla stock makes up just over one-tenth of one percent of the fund, it’s more than double the combined worth of its General Motors and Ford stock.

It’s an awkward position for the state. Michigan keeps Tesla out to protect the Detroit Three, but invests more in Tesla.

In 2014, Michigan passed a law banning the direct sale of automobiles. That means that Tesla, an automaker without a franchised dealer network, can’t court buyers in that state. Allowing it would mean unfair competition for automakers who operate a dealer network, lawmakers claim.

In a statement made to The Detroit News, the Treasury Department’s Bureau of Investments said, “The additional (Tesla) shares did not materially add to the risk of the overall $60 billion investment portfolio.”

Since the passage of the bill, Tesla has fought to persuade the state to allow sales of its vehicles. So far, applications for dealer and service facilities have been stymied by requests for more information.

Political and public sentiment seems to be working in Tesla’s favor, albeit slowly. A bill introduced by State Rep. Aaron Miller (R-Sturgis) seeks to overturn the ban on direct sales, while an interest group called the Michigan Freedom to Buy Coalition wants a legislative solution to Tesla’s plight. Other free-enterprise advocates support the automaker, but its opponents loom large.

The Michigan Automobile Dealers Association, which initiated the 2014 bill, continues to stand its ground. If other automakers can play by the rules, it states, so can Tesla.