Tesla Outwits Protectionist Michigan With Rolling Showroom

DETROIT, MI — Electric carmaker Tesla is prohibited from selling its vehicles directly to Michigan residents under a law the Federal Trade Commission says amounts to “protectionism” for the state’s automobile dealers, but Elon Musk’s startup has still found a way to introduce motorists in the state to its fleet of luxury automobiles. A custom Airstream trailer, pulled by a Tesla Model X SUV, is a showroom and design studio on wheels, a not so subtle signal from the upstart carmaker that the high stakes battle to do business in the state is fought on multiple fronts.

Tesla tried to open a showroom in Michigan in 2014, prompting legislative action to ban direct sales outside of licensed franchise dealers. Gov. Rick Snyder signed the law, so customers who are mentally sold on a Tesla will still have to go online or go to a showroom in another state to make the deal for one of Tesla’s electric cars.

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Tesla is suing Michigan and top officials in federal court, arguing the law creates a state-sponsored monopoly. As the lawsuit wends through the federal court system, Tesla hasn’t acquiesced. Tesla opened a showroom inside Nordstrom in Troy’s Somerset Collection mall in December, referring potential customers to the website or to a Tesla location in Ohio.

There are several company stores in Ohio but Tesla had to cut a deal to open them in what has become a state-by-state fight for market share by the automaker. In Michigan, where Detroit’s Big Three automakers are all working on their own technology-driven next generation cars, launched a full-throttle campaign to shut Tesla out.

The Tesla rolling design studio wasn’t expressly created to skirt Michigan and other protectionist state laws, though Musk’s team clearly sees value in taking it to places where well-heeled Michiganders — Tesla models start at around $66,000 — gather to play.

During the busy 4th of July holiday period from June 29-July 9, the trailer will be parked at Grand Traverse Resort and Spa at Acme, The Detroit News reported. Other scheduled stops are Crystal Mountain resort at Thompsonville, July 11-17; the Art Fair in Ann Arbor, July 20-23; and in Grand Rapids July 27-31. For a week earlier this month in Detroit, the Tesla Airstream was parked outside luxury brand Shinola’s Midtown flagship store.

As long as Tesla isn’t making deals with customers, there’s nothing wrong with the company bringing its showcase to Michigan, Secretary of State’s Office Fred Woodhams told The Detroit News.

In its lawsuit against Michigan, Tesla scored an opening victory when a judge ordered two lawmakers to turn over communications with car dealers and automobile industry lobbyists. One of them, Sen. Joe Hune, a Gregory Republican who sponsored the amendment that closed the door on Tesla, is married to a lobbyist for car dealership. The other is Rep. Jason Sheppard, a Lambertville Republican Tesla claims confirmed the true reason for the ban was that “Michigan auto dealers don’t want Tesla in Michigan.”

Michigan’s law is “egregiously protectionist,” Tesla lawyers argue, writing in the complaint that “rather than try to compete with Tesla, some of these well-connected players have tried to block Tesla from local markets altogether by lobbying state legislatures for protectionist legislation.”

The lawsuit was filed in U.S. District Court for the Western District of Michigan in September 2016, following a decision the year prior in which Tesla was denied permission to open a showroom in Grand Rapids. Named as defendants are Michigan Secretary of State Ruth Johnson, who rejected Tesla’s application for a new-dealership license, as well as Gov. Rick Snyder and Attorney General Bill Schuette.

Tesla CEO Elon Musk steps out of the new Tesla Model X. (Photo by Justin Sullivan/Getty Images)