Morgan Stanley On Michigan's Tesla Ban: It's Only A Matter Of Time Before Something Gives
Morgan Stanley issued a note Wednesday on Michigan Governor Rick Snyder signing a bill to prevent Tesla Motors Inc (NASDAQ: TSLA) from operating its own stores in the state.
Analysts led by Adam Jonas noted that while Ford Motor Company (NYSE: F) and General Motors Company (NYSE: GM) publicly favor maintaining the existing dealer franchise laws, the system is antiquated and makes "it harder for GM and F to provide best execution for their customers."
"Tesla is the only OEM that can truly control the customer experience at many of its stores, while the rest are prevented by law. We see this is a major advantage for TSLA and a disadvantage for all others," according to the note.
Jonas added that "Tesla's quest to own its stores has brought to light issues that have long faced the industry. As TSLA grows in significance and expands its sales network, we expect more debate (at the Federal level) on the double standard in the application of dealer franchise laws."
The note indicated that over the long term, OEM-owned stores may be in the best interests of manufacturers, dealers and customers.
Jonas believed "it's only a matter of time before something gives. We expect that in the next 2 to 3 years, this could very likely mushroom into a national issue. We believe these laws exist to support the weakest link in the network. Stronger, better capitalized dealers should thrive with freer competition."
Tesla Motors Inc traded at $233.51 in the premarket, down 0.78 percent.
Latest Ratings for TSLA
|Jan 2017||Guggenheim||Initiates Coverage On||Buy|
|Oct 2016||Goldman Sachs||Maintains||Neutral|
|Oct 2016||Goldman Sachs||Downgrades||Buy||Neutral|
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.