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Tesla just lost its fight for direct sales in Michigan

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Tesla just lost its fight to sell electric cars in the auto industry's backyard.

Michigan Gov. Rick Snyder doubled down Tuesday on a state prohibition against letting Tesla sell its vehicles directly to consumers, a policy battle that's playing out in a number of states around the country. Saying he was open to more discussion about the matter, Snyder nevertheless signed HB 5606, a bill that effectively reinforces the power of auto dealers at the expense of challengers like Elon Musk.

Michigan currently requires car manufacturers to sell their vehicles through franchised dealerships, according to the governor's office.

"Based on our research," said Snyder, "[HB 5606] doesn't change current law at all. It merely strengthens existing language, and it had very strong legislative support."

By signing the bill into law, Snyder has put the brakes on Tesla's ambitions to sell its battery-powered vehicles to the public.

Other states such as Arizona, New Jersey and Texas have largely sided with Michigan on the question of direct sales. But a notable exception is Massachusetts, where the state supreme court ruled in Tesla's favor last month. Federal regulators have also backed Tesla's side, saying state laws blocking Tesla from selling cars from its own dealerships were "protectionist."

A Tesla spokesperson didn't immediately respond to a request for comment.