Why Tesla’s Next Target Is the State of Michigan by USA Today @FortuneMagazine September 23, 2016, 1:49 PM EDT E-mail Tweet Facebook Linkedin Share icons In the battle between disrupters and incumbent companies, the incumbents struggle mightily and often futilely against inertia. History, culture, and employee incentives propel them toward doom, try as they might to follow a new path. But their long history and great size do give them one great advantage: clout with legislators, regulators, and other government leaders. Highly successful disrupters must eventually fight on that turf, deploying a skill that isn’t taught in computer engineering class, and it isn’t easy. But they can prevail. For example: Tesla yesterday sued the state of Michigan for the right to open a Tesla store. Co-founder Elon Musk’s disruption of the auto industry isn’t just technological. By selling cars directly to consumers at its own stores or online, he’s also disrupting the industry’s sales model based on independently owned dealerships. The only problem with that model is that it threatens the incumbent dealers, who have been major donors to state politicians for a century. At the dealers’ instigation, the Michigan legislature two years ago passed an “anti-Tesla” amendment forbidding direct-to-consumer sales by automakers. Tesla applied for a dealership license under the law, knowing its application would be rejected, which it was last week. The company lacks the clout to win in the legislature, so it’s trying to win in court. The outcome is impossible to predict. In its suit, Tesla says that at a June negotiating session with carmakers, dealers, and legislators, one legislator said, “The Michigan dealers do not want you here. The local manufacturers do not want you here. So you’re not going to be here.” We shall see. The company is prohibited from direct sales in Connecticut, Texas, and Utah as well as Michigan, but it operates stores in 23 states and the District of Columbia. Hundreds of thousands of consumers have bought or ordered Teslas. Long-term, does anyone really doubt where this is going? Incumbent taxi operators continue to fight Uber in the U.S. and worldwide. A company manager visited Anchorage this week to try negotiating Uber’s return to the city, from which it was exiled last year after the state said its drivers are employees, not contractors. A Finnish court this week confiscated the earnings of two Uber drivers for operating without taxi licenses. Temporary authorizations for Uber in Pennsylvania and separately in Philadelphia will expire soon, and if they’re not renewed, the service will cease operating there. Panicked taxi drivers and operators believe they can’t beat the Uber model, so they’re trying desperately to stave it off. But the company’s experience in Montreal is probably more representative of its long-term future. The provincial government introduced a bill requiring all Uber drivers, many of whom drive in their spare time, to have a taxi license costing some $150,000 But many of the governing party’s own members opposed the Uber-killing bill, as did the Chamber of Commerce and an environmental group. An amended bill delaying application of the law for 90 days passed in June, and in that time Uber negotiated a deal with the government dropping the bill’s key feature, the license requirement. The law imposes other restrictions on Uber, but the service is now legal and viable in Montreal, which is what the bill was trying to prevent. Sign up for daily insights, updates, and opinion on leadership and leaders in the news at the Power Sheet. Fighting big, desperate incumbents is brutal. Disrupters can’t win playing the big guys’ game. They win only by winning with customers, as Tesla and Uber are doing. When they can do that, even as the incumbents fight rearguard actions, the eventual outcome isn’t in doubt.