Tesla takes it to Michigan, opens gallery in state that bans sales of its electric cars


Tesla Store opening in Westfield Mall, London, Oct 2013

Tesla Store opening in Westfield Mall, London, Oct 2013

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Tesla Motors is not legally allowed to sell its electric cars directly to customers in Michigan, thanks to subtle changes made two years ago to the state's franchise laws.

But Tesla now has one store in the home state of the Detroit Three automakers.

However, that location is only a "gallery" where consumers can look at cars, but can't buy.

CHECK OUT: Tesla sues Michigan over ban on direct sales of its electric cars

The Tesla gallery is located in a Nordstrom department store at the Somerset Collection shopping mall in Troy.

The first of its kind in the state, the Troy gallery showroom will be open for at least six months, Tesla told The Detroit News.

The 700-square-foot space houses a single white Tesla Model X crossover, and is located on the first floor of the Nordstrom department store.

Tesla gallery at Nordstrom

Tesla gallery at Nordstrom

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Tesla announced an agreement with the retailer earlier this year to open small showroom spaces in Nordstrom stores.

Both companies are committed to the collaboration at least through the end of this year, at which point they will assess whether it is worthwhile to continue.

Tesla has expressed interest in selling cars out of these locations, but can also operate them as galleries, just like the Michigan location.

ALSO SEE: Tesla to sell electric cars at Nordstrom department store, expanding retail footprint

Interested consumers who visit a gallery and want to order a car are directed to Tesla's website.

Michigan customers can have their cars delivered, or pick them up at Tesla retail stores in neighboring states.

There are currently about 400 Tesla electric cars registered in Michigan, according to The Detroit News.

2016 Tesla Model S

2016 Tesla Model S

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Wording changes to Michigan's franchise law were quietly enacted in October 2014 that ensured the sole legal way to buy cars in Michigan would be through a franchised dealer.

At the time, the move was called "corrupt politics at its worst" by Daniel Crane, a law professor at the University of Michigan.

The Michigan Secretary of State's office told the paper it is aware of the Troy gallery, and will be "reviewing what Tesla is doing at that location."

MORE: Michigan says selling Tesla electric cars in state is illegal, again

In September, that office denied an application submitted by a unit of Tesla to become a dealership in the state, a bid by the automaker to circumvent the direct-sales ban.

Tesla then sued the state of Michigan, alleging that its franchise law was unconstitutional.

State officials have yet to respond to the lawsuit, which represents a different tack from Tesla's previous tactic of accepting limits on how many retail stores it can open in states where franchised dealers oppose its presence.

If Tesla is successful in challenging a state's ability to pass laws protecting franchised dealers, it could also dramatically change the balance of power in the car-sales field.

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