Even though Tesla is not officially attending the Detroit auto show this week, the company managed to use the event to shine a light on the regulatory hurdles it is facing in the state of Michigan. Tesla’s vice president of business development Diarmuid O’Connell talked to MLive and confirmed that the company skipped the Detroit auto show this year because of Michigan’s direct sales law.
Last month, we reported that NAIAS officials confirmed that Tesla pulled out of the North American International Auto Show “at the last-minute”. At the time, we couldn’t confirm that Tesla not being able to sell cars in Michigan due to the state banning direct sales of vehicles was the reason for skipping the show, but O’Connell confirmed it today:
“The reason we’re not at Detroit this year relates to the issue here. We use shows to sell cars, and this is a show in Michigan.”
He said that it wasn’t the only reason, but the main one:
“If we can’t sell cars here then why would we be marketing cars here? You know, it’s many factors but it relates specifically to that. “
In Europe, Asia, Canada and where they are allowed to in the United States, Tesla sells the Model S, and now the Model X, through company-owned stores. Tesla CEO Elon Musk prefers this method over third party-owned dealerships because of the bias car salesman have when it comes to selling both electric vehicles and gasoline-powered cars.
It’s difficult to sell the advantages of one without having to highlight the disadvantages of the other, and when most of your inventory is gasoline-powered cars, it is clear which you will be tempted to suggest to potential customers.
Some states, like Michigan, have old laws prohibiting manufacturers to sell cars directly to consumers, forcing them to go through dealerships instead of company-owned stores. Where these laws are more relaxed, like in New Jersey or New York, Tesla is allowed to have a restricted number of stores to operate, but in the most extreme cases, like in Texas, Tesla employees can’t discuss pricing in any way or oversee the delivery process.
In Texas, Tesla relies on what they call “galleries”, which looks very much like a Tesla store, but where employees can only educate the public on Tesla’s cars and technologies, then when they are asked about pricing or delivery information, they refer customers to the Tesla website.
Tesla keeps investing in the state and last year it bought an auto supplier named Riviera Tool in Grand Rapids, which it renamed “Tesla Tool and Die”. O’Connell added:
“We have an expanding economic footprint on this state and we want to invest more but we can’t even do business here. It’s crazy.”
Featured Image: from Mojomotors, a map of where Tesla is allow (blue) to have stores or restricted on direct sales (red).