Tesla Applies For Dealership License In Michigan. This Ought To Be Interesting

February 1, 2016

For years, Tesla Motors has fought to undo, overturn, and slip through loopholes in state franchise laws that prevent automakers from selling vehicles directly to consumers. But now, in an interesting twist, Tesla has begun applying for a dealership license -- in the state of Michigan, no less.

Tesla hasn't commented publicly on its application. All that's known at this point is that it was initially filed in November and that the company has recently provided supplemental information to the Secretary of State.

While that might make it seem as if the application is en route to being approved, the process of filing additional information isn't unusual. We won't know for certain whether Tesla's application has been given a thumbs-up until the review process is complete, which could be as soon as March or April.

Here's what we do know, though:

1. Tesla still won't be able to operate dealerships itself. According to Michigan state law, the company will have to contract with third parties for that. However, Tesla would certainly be able to set parameters for the look and feel of dealerships, just as other automakers do.

2. Tesla's application was for a "Class A" license, which means that it would allow dealers to sell both new and used vehicles.

3. That license also requires that Tesla have a service center on site or have a close relationship with one nearby.

All of which is very interesting. However, some of the strategic questions behind Tesla's application remain thoroughly unanswered.

For example: why Michigan? Why bend the company's longstanding principle of fighting franchise laws in a state that is overwhelmingly devoted to models from Detroit's Big Three

And also: why now? It seems as if public sentiment is clearly on Tesla's side, and even the FTC has been pushing to ease franchise law restrictions. Why backtrack now?

The biggest reason could be simple: gas prices. Though the link between fuel prices and electric/hybrid car sales has been thoroughly questioned, automakers aren't fully convinced. Recently, Tesla CEO Elon Musk was quoted as saying that low oil prices will cause electric car sales to "suffer".

And so, at a time of uncertainty and change, it may not be surprising that Musk is looking to expand Tesla's footprint as far as possible.

And if he's going to do that, why not aim high? Apart from Texas, few states have expressed such staunch opposition to direct sales as Michigan. If Tesla can change gain traction there, it can do so almost anywhere. When it comes to cars, as Michigan goes, so goes America, perhaps.

That said, Tesla is readying a Plan B, which it might roll out even if the dealership application is approved. The company has built a coalition of conservative groups that support dealer-to-consumer sales, and it could be readying a ballot issue, too. Find out more at Green Car Reports.

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