January 22nd, 2020

Similar to other states, Michigan has maintained a state law that prohibits and restricts automakers from selling vehicles directly to consumers. Auto manufacturer Tesla, Inc., however, prefers to sell its vehicles directly to consumers because of its niche market, which eliminates the need for their vehicles to be traditionally sold through a network of independent dealers. As a result, Tesla was not allowed to sell in Michigan directly. In response, Tesla sued Michigan alongside several other states that prohibited direct sales to consumers. In January 2020, Attorney General Nessel announced a settlement between the State of Michigan and Tesla allowing the manufacturer to sell vehicles directly to Michigan consumers. 

The settlement allows Tesla to service vehicles through a subsidiary, deliver vehicles to customers in Michigan, and assist with sales through gallery locations throughout the state. These galleries will be able to educate consumers and facilitate transactions out-of-state. Tesla now has the opportunity to conduct demonstration drives and have conversations about pricing, service, financing, leasing, and trade-in options with prospective buyers. Essentially, Tesla can facilitate ordering and purchasing of vehicles as long as the actual sale takes place in another state. As part of this settlement, Tesla has dropped its suit against the State.

We thank AG Nessel for pursuing this settlement; it will increase sales and enable more innovation and competition for environmentally friendly vehicles in Michigan.

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