Tesla Inc., now the second most valuable automaker in the world, has finally gained a foothold in the birthplace of the U.S. auto industry.
The same day its market value topped $100 billion — surpassing Volkswagen Group for the No. 2 spot — Tesla reached a settlement with the state of Michigan that will allow it to sell and service its electric vehicles, through a subsidiary, in a state it previously had been barred from operating in.
The settlement is a win for Tesla, which has been trying for years in Michigan and other states to upend strict dealer-franchise laws with its direct-to-consumer sales model. The decision, experts say, could serve as a template for similar cases in other states and pave the way for startups to sidestep dealers.
"The handwriting's on the wall for the franchised dealer as the exclusive way consumers interact with car companies," Daniel Crane, a University of Michigan law professor who specializes in antitrust and regulatory issues, said in an interview. "It's pretty clear it'd be impossible for the state to deny someone else; it paves the way for any new EV company that doesn't want to use traditional dealerships."
Those new players could include Rivian, which has operations in Plymouth, Mich., and has raised billions from investors that include Amazon and Ford Motor Co. Rivian, which plans to launch later this year, has said it plans a factory-direct retail model and is exploring subscription services.
Crane, who wrote a blog after the settlement saying the dealer lobby was a big loser in the matter, says the decision could put more pressure on traditional automakers to consider other ways of doing business.
"The legacy companies can't continue forever to use a dealer model from the 1930s," he told Automotive News. "Being required to use only that, I think, is a competitive disadvantage. They'll have to find a way to get flexibility in their distribution method or they'll be left behind."