The settlement also allows Tesla to open galleries in the state, although it still may not transact “sales” of its cars in the state. In effect, this means that Tesla can have sales people show its cars to potential customers in retail spaces (i.e., malls), arrange for test drives, help customers figure out what options they want on their car, and facilitate the paperwork. The customer will then have to complete the actual sales transaction over the Internet or telephone with Tesla in California (or wherever Tesla houses its sales function). The car will then be delivered to the customer in Michigan, which will increase the convenience of the buyer experience. The only remaining limit is that the sales contract needs to say that title will transfer out of state otherwise, the customer can configure and order the car from within the state. Tesla is clearly a big winner in this settlement. Who are the other winners? And who are the losers? There is no good reason to deny Tesla the right to open whatever sort of sales operation it wants in Michigan, but this remaining limitation will have relatively little effect on Tesla’s business model. Even in states where Tesla has complete freedom to sell cars as it wants, it doesn’t generally open traditional dealerships with lots of inventory sitting on a lot. The company operates on a custom order basis and usually uses the sort of galleries it will now be able to open in Michigan. So, while still arbitrary and annoying, the Michigan settlement gives Tesla everything it needs to compete in Michigan.
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