Tesla settles with Michigan over direct sales, could open door to enter the state

Tesla has been in a legal battle with the state of Michigan over direct sales and service for four years now, but it has reportedly come to a settlement with the state that could finally open the door for Tesla to enter Michigan.

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

After trying to change things at the legislative level in 2016, Tesla filed a lawsuit against the state, 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 at the last hour.

It has since been a long legal process, during which Tesla tried to prove that lawmakers were influenced by car dealers to specifically prevent Tesla to sell vehicles direct to consumers in the state.

Similar situations happened in other states where they used older laws meant to protect franchise car dealers from direct competition with their own automakers, but Tesla never used car dealers and therefore cannot unfairly compete with them.

Michigan is the most populous state that still prevents Tesla from selling and servicing its own cars.

There are still thousands of Tesla owners in Michigan, but they have to travel to neighboring states, like Ohio, to buy and service their cars. Tesla also uses a mobile service fleet to help customers.

Now Bloomberg reports that Tesla reached a settlement with the state regarding the issue:

Tesla Inc. has reached a settlement with the state of Michigan over its federal lawsuit challenging a state ban on direct-to-consumer car sales, according to people familiar with the matter.

No detail about the announcement has been released yet, but a filing is expected to be released tomorrow. We will report back when we have more details.

Electrek’s Take

Finally. That was a dumb problem that Tesla had to deal with for a long time. Not even allowing Tesla to have service centers in the state was completely stupid.

Hopefully, the resolution is going to allow Tesla to fully operate in the state, but I doubt it.

I suspect it will be something closer to what Tesla achieved in places like New York, where it was allowed to open a predetermined number of stores and service centers.

But that alone would be great progress for Michigan.