The home of the U.S. auto industry – Michigan – is now going to allow Tesla Inc. to sell and service its EVs after the company and the state hammered out a compromise.
Michigan Attorney General Dana Nessel is expected announce Wednesday the plan that will allow the automaker that uses a no-dealer model to begin selling vehicles in backyard of its three Detroit-area competitors, according to the Detroit News.
Prior to this, Michiganders had to go to another state to buy or lease a Tesla and then drive it back across the border. They can also go to a gallery in an upscale mall in Troy, Michigan, a Detroit suburb, to get information and even arrange a test drive. However, the gallery – until now anyway – could not facilitate the sale of a Tesla.
Under terms of the settlement, Tesla would be allowed to deliver vehicles in Michigan so long as they are first titled outside the state. A Michigan owner could then get the title switched to Michigan.
The deal is quite a turning point for the EV maker as Michigan defended the rules requiring dealers to sell new vehicles, protecting the home turf of General Motors, Ford and Fiat Chrysler. Now with the Ford Mach-E and the Chevy Bolt and Hummer EV pickup providing increased competition, Tesla gets to fight on a more even playing field.
“Michigan was one of the staunchest critics of Tesla’s use of online retailing without traditional franchise dealers,” Karl Brauer, an auto analyst with Kelley Blue Book, told the News. “The domestic automakers felt it was patently unfair to give Tesla that much control over its retailing while every other automaker follows franchise dealer laws.”
The previous ban was so encompassing that Tesla not only could not sell vehicles in Michigan, but also it was barred from servicing any of its vehicles in the Great Lakes state too. Michigan residents who needed sales or service help were forced to travel to Cleveland or Chicago, although Tesla did open a service center in Toledo, Ohio, less than 90 minutes from Detroit to offset the travel time for repairs.
The deal ostensibly ends Tesla legal battle to gain access to the state, and some observers believe it may pave the way for other states to make similar agreements with the California-based EV maker. Throughout the years, Tesla’s pushed to get into all 50 states with varying degrees of success.
Michigan’s former Gov. Rick Snyder signed a bill into law in October 2014 that strengthened the existing law that prohibited direct sales of new cars with the support of Big Three automakers. The state denied Tesla a dealership license to sell vehicles in Michigan in 2016.
However, getting access is only half the battle. As Tesla seeks to gain more and more customers, analysts wonder if Michigan car buyers will be part of that formula for success.
“It will be interesting to see how readily Motor City residents take advantage of Tesla’s local availability,” Brauer told the News. “At the very least, this latest win for Elon Musk confirms that even” Fiat Chrysler Automobiles NV’s “Ford’s and GM’s influence on Michigan’s state government couldn’t stop Tesla’s incursion.”