Tesla gets some official loopholes around stupid laws to sell direct in Michigan

Tesla has reached a settlement with the state of Michigan to allow direct sales and service of vehicles through some official loopholes around the stupid laws that were preventing them from operating in the market.

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.

Yet, as an automaker, Tesla was still not allowed to operate its own stores and service centers in the state, leading to the lawsuit.

The legal battle over the issue is now coming to an end.

As we shared earlier this week, local media in Michigan have been reporting that Tesla reached an agreement with the state to settle the lawsuit.

Today, we get to see the joint motion for dismissal, and it reveals how they are going to allow Tesla to sell and service directly to customers in Michigan.

In short, they are creating some legal loopholes.

For example, when it comes to service, Tesla technically can’t service its vehicles directly in the state, but they will be allowed to do it under a wholly owned subsidiary.

Here’s the relevant part from the motion:

Under Michigan law (including M.C.L. § 445.1574(1)), Tesla’s status as a manufacturer of motor vehicles does not prevent employees of Tesla from performing warranty, recall, service, or repair work in Michigan so long as the work is not performed at a motor vehicle repair facility that is directly owned by Tesla itself, and that those employees are properly certified as specialty or master mechanics, as appropriate, under M.C.L. § 257.1311. In particular, neither M.C.L. § 445.1574(1)(p) nor § 445.1574(1)(q) nor any other provision of Michigan law prohibits employees of Tesla from performing warranty, recall, service, or repair work at a facility owned or operated by the Tesla Service Subsidiary on vehicles owned or leased by Tesla customers.

This should allow Tesla to exploit an “official loophole,” for the lack of a better word, and open service centers in Michigan as long as those locations are officially owned and operated by a subsidiary.

As for sales, Tesla is going to be allowed to deliver cars to customers in the state, but the titles will have to transfer from a state other than Michigan:

No provision in M.C.L. § 445.1574(1) nor any other provision of Michigan law prohibits Tesla from delivering vehicles to Michigan residents in Michigan(whether directly, through a subsidiary, using an independent carrier, or otherwise), including assisting them with vehicle trade-ins, so long as legal title for any vehicles sold by Tesla transfers outside the state of Michigan, consistent with M.C.L. §§ 440.2106(1) and 440.2401.

This should enable Tesla to open stores in the state.

As we previously reported, Michigan is the most populous state that still prevents Tesla from selling and servicing its own cars.

This should change as soon as the motion for dismissal becomes official.

Here’s the motion in full:

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