Sheehan & Associates, P.L.C.

Tesla pushes the boundaries of the laws in Michigan

Are you a conservation-minded individual who wants to make your next auto purchase a Tesla? If so, you'd better hope you don't live in Michigan — unless you plan to drive to the border of a nearby state and purchase the car there.

Why can't you buy a Tesla in Michigan? The answer is simple, but it has complex implications. You can't buy a Tesla in Michigan because a state law blocks automakers from selling their product directly to consumers without going through a car dealership as the middleman, which ends up adding to the price of the vehicle.

Tesla is fighting the issue out in court, and generally has the Federal Trade Commission's support. The FTC believes that blanket regulations prohibiting consumers and manufacturers from doing direct business with each other are needlessly limiting.

Direct-to-consumer auto sales don't just affect Tesla. They potentially limit other, equally innovative, vehicle designers. Businesses in other industries that strive to provide affordable products by avoiding contracts with independent retailers can also suffer a chilling effect. The FTC believes that the beneficial pressures of competition shouldn't be hampered by unnecessary government interference.

For now, Tesla has decided to push the boundaries of the state's laws by opening a showroom in the center of a Nordstrom's in the Somerset shopping mall. It's a bold move for a company that's prohibited from actually making a deal to sell one of its cars within the boundaries of the state.

Furthermore, Tesla can't even offer interested buyers a test drive, although some Tesla owners in Michigan have banded together to offer test drives to potential new owners. They see it as a way to help promote new legislation that would put consumers — not the state — in charge of how they do business and with whom.

Can the state stop Tesla from pushing the limits of the law like this? Probably not. The company took steps to make it clear that the cars aren't for sale, including by erecting large signs stating just that. This makes the showroom essentially only advertising.

If Tesla eventually prevails in court, it paves the way for other entrepreneurs to offer affordable products to their customers.

In the meantime, if you're looking to market an innovative product directly to consumers in Michigan, consider contacting an attorney first to make sure that you don't run afoul of business regulations.

Source: Electrek, "Tesla pushes boundaries of Michigan's direct sales law and opens showroom in the state," Fred Lambert, Dec. 02, 2016

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