House Bill 5606 was originally drafted for the purpose of curtailing dealership fees, but an amendment was later on added, which prevents car makers like Tesla from directly selling to consumers in Michigan.
Now, Gov. Rick Snyder has until Oct. 21 to sign the bill officially into law.
Elon Musk, CEO and co-founder of Tesla, says the uniqueness of Tesla's automobiles is enough reason to continue selling directly to customers instead of entering a selling agreement with dealers or franchisees.
Tesla operates its own galleries and showrooms and even accepts orders made online. The bill, however, prohibits car manufacturers from selling products directly to customers and requires them instead to sell through dealers that have a franchise.
Tesla's approach undermines how franchisees have been selling vehicles for the past several decades, owners of dealerships say.
The change in House Bill 5606, Tesla says, was initiated by the Michigan Automobile Dealers Association.
"On Oct. 1, the Michigan Automobile Dealers Association succeeded in passing a bill that is harmful to consumers. The bill, HB 5606, was originally a single amendment to existing law designed to ensure that the car dealers can tack additional fees on to the purchase price for all vehicles (from any manufacturer) sold in Michigan," Tesla writes in a blog post.
"Such fees have a controversial history, are generally regarded with skepticism and have been the subject of consumer concern in other states," the company adds.
This year, the automaker also faced similar arguments with dealers from Pennsylvania, Ohio, New York, New Jersey, Missouri, and Georgia. All arguments, however, ended with parties reaching certain compromises.
Tesla's battle to directly sell to consumers clearly bypasses the dealership system supported by the National Automobile Dealers Association, a group that represents new car dealers numbering almost 16,000.
"States are fully within their rights to protect consumers by choosing the way cars are sold and serviced," says Charles Cyrill, a spokesman for the association.
"Fierce competition between local dealers in any given market drives down prices both in and across brands. While if a factory owned all of its stores, it could set prices and buyers would lose virtually all bargaining power," Cyrill writes in an email.
Tesla is appealing to consumers to help urge Gov. Snyder to veto the bill and allow the issue to be subjected to a full and open debate in the legislature in 2015.
