Three months after Tesla sued the state of Michigan, challenging a law that says automakers can only sell through franchised dealerships, the electric carmaker has thrown caution to the wind and debuted a showroom inside a Nordstrom department store in the Detroit suburb of Troy.
Fortune reports that the showroom — which takes up about 700-square-feet of the department store — marks the first in Michigan. The state and Tesla have squared off over a two-year-old law that bans Tesla’s usual practice of selling cars directly to buyers without the use of intermediary franchised dealerships.
While the 2014 law is still in place, Telsa say it’s not doing anything wrong, as it still has the right to show its cars to potential customers at Nordstrom, even if they can’t buy the car in the state.
The store-within-a-store is the third of its kind for Tesla, which opened other locations in Los Angeles and North Carolina earlier this year.
Essentially, the showroom serves as a hands-on marketing approach for the electric carmaker, giving shoppers the ability to learn about and see inside the Model S and Model X.
Tesla’s road to opening the showroom hasn’t exactly been easy.
The fight to sell its vehicles in Michigan began back in Oct. 2014, when Governor Rick Snyder signed into law a bill that included an amendment explicitly banning Tesla from selling vehicles in the state unless it was through a franchised dealership.
Michigan law already required that anyone selling a car in the state do so through a dealership, but since Tesla had no retail operations in Michigan, it maintained that it wasn’t violating the law by allowing Michigan residents to buy their cars online.
The measure effectively shut the door on Tesla’s direct-sales approach in the state, meaning residents had to go out of state to buy one of the cars. That, or Tesla would need to make arrangements with franchised dealerships to sell their cars — a move that appears to be taking shape now.
Tesla appeared to be considering its options earlier this year, when it was revealed that the company had applied for a Class A dealership to sell new and used cars in the state.
If the application were to be approved, Tesla would be required to open a “repair facility as part of their business or have an established relationship with a licensed repair facility.” Additionally, the company would have been allowed to contract with anyone — except itself — to sell cars with the state’s dealership licenses.
That meant it was possible the company could send a former employee to the state to open a dealership with a franchise agreement that would mandate the same look and business practices as its current Tesla-run stores.
However, any hope of that happening was put to rest in September when Michigan officials denied Tesla’s application.
A week after the decision the company filed suit against the state, claiming its 2014 “anti-Tesla” law is unconstitutional.
The company said at the time that it’d rather resolve things with legislation, but was forced to take the issue to the courts as state lawmakers have said there will be no hearings on the matter.
“Unfortunately, the local auto dealers and local manufacturers have made clear that they oppose any law that would allow Tesla to operate in Michigan,” the company said in a statement. “Given their position, the leadership of the Michigan legislature recently informed Tesla that it will not even hold a hearing to debate the issue. As one leading legislator told Tesla: ‘The local auto dealers do not want you here. The local manufacturers do not want you here. So you’re not going to be here.’”
by Ashlee Kieler via Consumerist
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