Tesla Finally Cracks A Ban On Direct-To-Consumer Sales On The Big Three’s Home Turf

Tesla Finally Cracks A Ban On Direct-To-Consumer Sales On The Big Three’s Home Turf
Image: David Zalubowski (AP

Even though direct-to-consumer car sales, Tesla’s preferred sale model, have been banned in Michigan since 2014, you can still spot a few Model Ss and 3s bravely traversing the state’s icy roads. Brave, because Michigan law bans Tesla from even opening up a service station. Michigan Tesla owners have been treking, sometimes towing, to Ohio to get cars serviced, but that seems to be ready to change.

Tesla and Michigan have settled a U.S. federal lawsuit challenging Michigan’s ban on direct-to-consumer sales, according to Bloomberg, and could file the agreement as early as Wednesday. While Tesla still won’t be selling cars directly in the Great Lakes state, the company will be allowed to open a service station. Customers would still have to buy their Teslas in another state then transfer the title to Michigan.

According to a statement from the Michigan Attorney General Tesla will be able to sell cars in the state, just as long as the sales contract indicates that the sale took place in a state other than Michigan.

Since 2017 Tesla has operated a store in a high-end shopping mall in Troy, Michigan, though employees are only able to showcase the vehicle, not sell it. The model inside the mall even has a Not For Sale sign on the windshield. The state has banned the company from opening service stations. Elon Musk has identified service stations as key to growing the brand.

This meant Michigan owners had to not only buy their vehicle in another state but had to go to Toledo, just over the Ohio-Michigan border, to get serviced. And there’s nothing a Michigan person finds more distasteful than going to Ohio.

This is a big deal. Tesla sells its cars directly to consumers in two dozen states, but still faces roadblocks in many parts of the country. Of those states that do allow for direct-to-consumer auto sales, only ten do not have a limit on the number of Tesla stores allowed. In Michigan, the problem is obvious; the domestic auto industry, still the largest employer in the state, has a tight grip on controlling laws and policies that benefit it. Even a small win in this state could signal future victories.

That doesn’t mean Tesla doesn’t have a tough fight on its hands. Auto dealers all over the country form powerful lobbies to push legislatures to keep the dealership sales model as the status quo. While Tesla spends money and energy trying to change the law in these holdout states, making headway has been slow going.

In 2017, for instance, Tesla spent 1.2 million in Texas trying to crack into direct sales, according to Quartz, only for Texas to consider even stricter laws on Tesla’s operations a few years later. Here are the states where Tesla still can’t sell directly to consumers:

  • Michigan (service centre ban being lifted, direct sales still banned)

  • New Mexico (also bans service stations)

  • Alabama (also bans service stations)

  • South Carolina (also bans service stations)

  • Lousiana

  • Texas

  • Connecticut

  • West Virginia

  • Wisconsin

  • Nebraska

  • Oklahoma