Tesla opens its first full ‘non-store’ in Michigan despite ban on direct sales

Tesla has opened a new gallery in Michigan which the automaker makes clear is not a “store” since its direct-sales business model is still banned in the state.

A change to the law in 2014 prohibits direct sales from automakers, which is blocking Tesla from obtaining a dealership license and sell cars in the state.

Last year, Tesla filed a lawsuit against the state after claiming that the ban on direct sales violates commerce laws and that it was pushed by car dealers and GM in an attempt to block the electric automaker.

The company first pushed the boundaries of Michigan’s ban on direct sales by opening a small showroom in a Nordstrom store the state.

At that location, like the bigger one Tesla opened yesterday, the automaker’s employees aren’t allowed to discuss pricing or delivery information, nor can they even give service, but they can still educate people about Tesla’s products.

Tesla commented on the new gallery (via Detroit News):

“We are excited to expand our presence in Michigan in order to educate consumers about the benefits of Tesla’s vehicles in a fun and engaging environment. Tesla’s new gallery at the Somerset Mall allows anyone interested in Tesla, including the thousands of Model 3 reservation holders in Michigan, to learn about our technology.”

The new location is the first retail presence for Tesla’s in Detroit, the heart of the American auto industry. It is located next to the Apple store at the luxury Somerset Collection mall in Troy.

While Tesla’s employees at the location will be limited to “educational roles”, Tesla is still suing the state to get the right to start selling cars at the location.

The legal battle is expected to take a while, but it should be an interesting process. As part of the discovery process earlier this year, Tesla filed to have two lawmakers turn over any communication with car dealers and automaker lobbyists about the ban.

One of the lawmakers, Sen. Joe Hune, R-Gregory, is the senator who introduced the last-minute amendment that created the ban in 2014 and his wife, Marcia Hune, is a lobbyist for car dealerships.

The other, Rep. Jason Sheppard, R-Lambertville, is being subpoenaed because Tesla claimed that he confirmed to one of their representatives that the reason behind the ban is that “Michigan auto dealers and manufacturers don’t want Tesla in Michigan”.

The two lawmakers fought against the disclosure of their communications, but U.S. Magistrate Judge Ellen Carmody denied their bids in August.

It looks like it’s going to be for lawyers’ eyes only for now, but it could get more interesting as the process moves forward.