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Tesla Motors, the innovative California automaker fighting for the right to sell battery-powered cars in this state, slips its foot in the door this week. And the door belongs to a Troy luxury mall.
Kirsten Korosec, an Arizona-based technology and automotive writer for Fortune magazine, delivers the news:
Tesla has opened a showroom in Michigan—a bold stance in the home of the Big Three U.S. automakers and in a state where it’s banned from selling its all-electric vehicles.
The all-electric automaker and energy company didn’t make a big announcement signaling to its rivals that it had arrived. The small 700-square-foot showroom quietly opened Thursday within a Nordstrom department store in Somerset Collection.
Concept illustration of the "gallery" at three Nordstrom stores. (Graphic from Tesla Motors)
Yes, shoppers can see -- but not buy -- a Tesla SUV where they buy socks, gloves and lingerie.
The Oakland site is Tesla's third "gallery" in a Nordstrom. The first opened in June in the menswear area at one of the chain's Los Angeles stores, where visitors can take a test drive with a Tesla employee.
Korosec describes the manufacturer's uphill effort to disrupt its industry by selling directly to divers:
The company sells its own cars directly online and through its own branded stores, not through franchised dealerships.
It’s an approach that other automakers and dealers oppose and have actively fought against. Some states . . . [including Michigan] have banned the direct sales model. In those states, Tesla can build a showroom—or gallery as it calls it—where customers can learn about the vehicles. . . .
Auto dealership associations, lawmakers, and even General Motors have stepped up efforts to end—or at least cripple—Tesla’s direct sales business model.
Tesla, founded in 2003 by Elon Musk, is fighting back in Michigan and elsewhere.
A lawsuit filed in September asks a Grand Rapids federal judge to declare that a 2014 state law violates the due process and equal protection clauses of the Fourteenth Amendment to the U.S. Constitution and the Constitution’s commerce clause. The company sued less than a week after Secretary of State Ruth Johnson rejected Tesla's application for dealership and service facilities in Grand Rapids.
"It will be interesting to see how the governor and attorney general try to defend Michigan’s outdated and anti-consumer law," a University of Michigan law professor, Dan Crane, writes in the Detroit Free Press, adding:
The unanimous view among credible economists is that direct distribution restrictions harm consumer welfare and, if anything, raise prices to consumers. . . .
We can do better.
The West Coast startup has only two high-end models so far, costing $75,000 to $115,000. Late next year, Tesla plans to introduce a Model 3 at about $30,000 after federal tax credits.
Its new Troy "showroom gives the automaker a chance to introduce consumers to its Model S and Model X vehicles," Fortune's article says.
More importantly, it gives Tesla the opportunity to educate consumers about the electric vehicle technology behind the Model S and Model X—not to mention the semi-autonomous driving system Autopilot and other tech-forward features found in the vehicles. . . .
Still, opening up a showroom in a mall during the busiest shopping season could be viewed as poking the bear that is the powerful automobile dealership lobby and the major automakers that are based here.
