Tesla, Michigan Finally Reach a Truce

Steph Willems
by Steph Willems
tesla michigan finally reach a truce

A long-standing legal battle pitting Tesla against the state of Michigan has finally been resolved. It was announced Wednesday that the automaker’s 2016 suit against the state, which forbids the direct-sales model employed by Tesla, ended in a settlement a day earlier.

The result? A way for Michigan residents to own and conveniently service a Tesla in the notoriously protectionist state.

Michigan law stipulated that new vehicles could only be sold to consumers through the age-old dealer model that cushioned its auto industry from modern threats. Upstarts like Tesla eschewed such a model for obvious financial reasons.

Tesla’s lawsuit resulted in a resolution filed in U.S. District Court that will make ownership of its vehicles a lot easier.

From Reuters:

The stipulation also says Tesla may “operate under existing Michigan law; sell cars to Michigan customers as long as the sales contract indicates the sale took place in a state other than Michigan; and, indirectly own service and repair facilities in Michigan through a subsidiary, Tesla Michigan.”

Under the settlement, Tesla can open galleries to inform potential customers about their vehicles, arrange demonstration drives, and carry out “ordering and purchase of a vehicle for which legal title transfers out-of-state.”

As a lack of nearby service facilities serves as a major roadblock to ownership, Tesla has long sought to open such centers in Michigan. The advent of the popular Model 3 only increased its desire to penetrate the market. Before now, owners living in the mitten had to drive to Ohio for servicing; the recent creation of a center in Toledo, while closer than Cleveland, still represented an inconvenient haul. If the car was disabled, it made the trip even more loathsome.

And this will remain the case until Tesla Michigan gets service centers off the ground. Ohio, of course, will remain the point of sale for most Michiganders.

[Image: JL IMAGES/Shutterstock]

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  • SCE to AUX SCE to AUX on Jan 22, 2020

    "sell cars to Michigan customers as long as the sales contract indicates the sale took place in a state other than Michigan" These carefully crafted words tell me that Michigan's Tesla store will legally be an arm of another state's Tesla store, somewhat like the way an embassy operates. So the paperwork you sign on Michigan soil might say "Tesla of Ohio" as the seller. I can't imagine anyone has to make a special trip to make this work, or else the agreement is valueless. Sales tax always is calculated for the buyer's home address, not the point of sale, and it can even vary by county within the same state. I've done this several times, and it's not complicated. Dealers are equipped to handle the paperwork of neighboring states.

    • See 3 previous
    • JimZ JimZ on Jan 22, 2020

      @FreedMike No no no no no. It wasn't the car companies who had the independent dealer franchise model codified into law, it was the dealer principals themselves. It was all just good-ol-boy local politics blown up. Owners of dealerships were often the wealthiest people in their communities, and they used their influence to curry favor with local and state legislators to get significant protection for them written into law. as far as I can tell the sole reason the other car companies are fighting this is because they're basically saying "why should they get a pass while we're stuck with it?"

  • Dividebytube Dividebytube on Jan 23, 2020

    I see Teslas here on the west side of Michigan... but the lack of a dealership and/or nearby service center has stopped me from looking at their cars. Of course I would only want to buy the most stripped down Model 3, even though I'm not a huge fan of the duck face.

  • Bobbysirhan A friend had one when they first came out. He was CFO of some green California company and could charge the Volt at work. At home, the PHEV gave him an excuse to make his wife park her nicer car outdoors while the Volt get their condo's one-car garage. He liked the Volt, and he spent very little on energy during the 'first one's free!' era of EV ownership. Of course, the green company went bust soon after, and he wound up with a job that involved far more driving and ultimately the need for a more substantial car. I drove the Volt once after his wife had made a return trip to Los Angeles, depleting the battery. I don't know what a first gen Volt drives like with a charged battery, but it was really gutless with two adults, a yellow lab, and a dead battery. My other memory of it was that it had a really cramped back seat for a car that was about as large as a Civic. My friend who bought it liked it though, and that's not always been the case for GM vehicles.
  • MrIcky I think the Shakedown is more my speed of the last call editions- but this is impressive.
  • Dukeisduke I tried watching the live reveal last night, but after 15 minutes of jawing by MT+ personalities (and yes, I like Chris Jacobs and Alex Taylor), I turned it off.
  • Paul MBAs gonna MBA.
  • Zipper69 Clearly beyond German thought processes to simply keep A for IC engine and use "E" for all other so you can have a A6 and a E6.