How’s this for pure irony. According to a report from Michigan Capitol Confidential, “The state of Michigan profited last year from trading shares of an automaker that isn’t even allowed to sell vehicles here.”
That report by author Evan Cater says that the state of Michigan’s pension funds scored substantial gains on Tesla stock when they elected to liquidate the last of their holdings in the auto manufacturer last year. That, says, Evans, despite that fact that “Current laws regulating the relationships between automakers and dealers prohibit the company from directly marketing its vehicles in Michigan.”
Evans learned from officials at the state Treasury Department that the state elected to “lock in investment gains, and meet regular pension system cash flow needs,” but liquidating its holdings in the auto makers stock. Having purchased Tesla stocks at various points over the last several years, and closing out the last of some 269,000 shares, Michigan was able to score $22-million in gains by doing so.
Evans tells Capitol Confidential readers that “The department chose not to comment on any conflict of interest related to the state’s profits from Tesla shares.”
Nevertheless, his article notes that in early August last year a U.S. Securities and Exchange Commission filing showed Michigan held 339,623 Tesla share valued at more than $72-million and three months later a similar filing showed they had sold all shares.
The irony is that, as Evans reports, “Tesla has unsuccessfully lobbied the Michigan Legislature to change the law that bans its direct-to-consumer sales model here. A bill introduced in the state House in 2016 would have allowed it on a very limited basis but never got a hearing. Now Tesla has sued the state in federal court for prohibiting automakers from selling directly to consumers rather than through a dealer.”
Evans points out that for a long time both Michigan and many other states have “enforced protectionist laws like this one” that benefit new car dealerships. By way of example, mandate that manufacturers sell and service only those cars that are placed through franchised dealers in the state.
Tesla has long utilized a manufacturer-to-consumer model, eliminating the need for dealership networks which generally are far more costly. That’s a model that Michigan has basically outlawed.
