Michigan Relaxes Laws Restricting Tesla From Selling Directly to Customers

The state’s Attorney General announced in a federal court filing that it had reached a settlement with the Silicon Valley company over the right to sell its vehicles in the state. The ruling brings an end to a legal battle that has stretched for the better part of four years.

Tesla strikes deal to sell cars in Michigan https://t.co/IZEDRHzDBt pic.twitter.com/bS9fFpQqYe

— The Verge (@verge) January 23, 2020

Successfully Cutting Out the Middleman

Tesla has had to sell its vehicles to Michigan via dealers, thanks to a law that forces them to use these middlemen in the state. Potential Tesla customers were forced to make the journey out of state to purchase a Tesla. Existing users couldn’t fix their EV’s either. The law presented a significant problem for Tesla – a company that had bucked against the trend of operating via dealers and has chosen to sell its vehicles through company-owned stores. The company eventually sued for the right to sell its vehicles in 2016, and it has now scored a massive victory. It’s worth noting that Michigan will not be repealing its dealer laws. However, the filing did provide enough room for the company to sidestep dealers, so it maintains direct contact with consumers. Since it’ll now be able to deliver directly to customers, there’s every likelihood Tesla would open more showrooms across the state. However, the resolution doesn’t give room for complete flexibility. Teslas delivered to Michigan will come with out-of-state titles to work around the restriction, meaning that customers will have to transfer the titles if they want their vehicles to be titled in their state. Also, Tesla would have to operate under a subsidiary.

Tesla Shares Appreciate After Impressive Performance

The news is coming off the heels of another prima milestone for Tesla after it became the world’s second most valuable auto manufacturer. The company’s shares rose four percent as of the announcement, bringing its total value over $100 billion. Tesla has now passed Volkswagen to become second only to Toyota as the world’s most valuable automobile manufacturer.

Tesla Just Became the No. 2 Most-Valuable Auto Maker. Look Out Toyota. https://t.co/ckYaBvdeRV

— Barron's (@barronsonline) January 22, 2020

Analysts have alluded to several important wins over the past months as a rationale for the increase in value. These include monumental orders for Cybertruck and the launch of its Chinese gigafactory. This month, the company reported that it had delivered over 367,500 vehicles last year- an impressive 50 percent increase over its production numbers for 2018. With the Cybertruck orders going through the roof, it could very well eclipse that number over the next year or two. However, it’ll need to perform way better if it wants to catch up to Toyota. Brand popularity and dominance in Asia have propelled the Japanese automotive behemoth to a valuation of about $230 billion.