Why Tesla Is Opening Showrooms Where Cars Can't Be Purchased

The latest showroom is in Michigan, a state famously opposed to direct-to-consumer vehicle sales.
Why Tesla Is Opening Showrooms Where Cars Can't Be Purchased
Image credit: Bloomberg | Getty Images
The second row seats of the Tesla Motors Inc. Model X sport utility vehicle (SUV).
Entrepreneur Staff
Staff Writer. Covers leadership, media, technology and culture.
2 min read

Elon Musk’s electric car maker Tesla is known for being on the vanguard of automobile technology. But sometimes even the most disruptive companies find themselves up against intractable boundaries -- in this case, U.S. auto industry regulations.

In several states, such as Connecticut, Michigan, Texas and Utah, Tesla hasn’t been able to shake a ban on direct-to-consumer sales of its vehicles. To get around it, the company has opened gallery showrooms in some states, where customers can view but not purchase Tesla vehicles. Last week, Tesla opened a new showroom inside a Nordstrom store at Somerset Collection, a shopping complex in Troy, Mich., The Detroit News reports.


Located in the Motor City suburbs, the 700-square-foot Tesla gallery is the first of its kind in Michigan and will be open for six months. Gallery attendants are not allowed to discuss pricing information or schedule test drives. Customers have to either order online and schedule a home delivery or travel to a store in Cleveland, Ohio, more than 200 miles away.

In 2014, Michigan passed an amendment which states that manufacturers may sell cars only through a “network of franchised dealers.” Still, there are reportedly already about 400 Tesla’s registered to owners in Michigan. Tesla is hoping to get more of its vehicles on the road by taking advantage of a legal loophole.

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