First Tesla Michigan gallery opens at Somerset

Posted by hpayne on October 27, 2017

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Troy — Think of it as an Apple store — except with cars.

Silicon Valley-based Tesla Inc. opens its first stand-alone gallery space in Michigan here Friday in the Somerset Collection mall off of Big Beaver Road. The gallery is located next to the Apple Store which opened in 2002 and has been an inspiration for the luxury carmaker’s direct-to-consumer, shopping-center marketing.

Like Apple, Tesla — which has 250 similar displays around the globe — locates its galleries in highly-trafficked retail spaces to make its products more intimate to buyers and to show off their elegant design. Unlike Apple, however, Tesla employees will not be able to sell or take orders for the cars on display. By Michigan law automakers cannot sell directly to consumers — only through independent franchise dealers.

Captained by tech visionary Elon Musk, Tesla pioneered the all-electric, battery-powered sedan with the Tesla Model S. The car captured the imagination of luxury buyers with its torrid acceleration and huge, 17-inch infotainment tablet and has been among the best-selling large sedans in the U.S. since its debut in 2011.

Following in the footsteps of other disruptive, computer-age pioneers like Apple’s Steve Jobs and Amazon’s Jeff Bezos, Musk has taken a new look at the automobile industry — including how cars are sold to buyers. And he thinks he has a better idea.

Tesla opened a small display inside Nordstrom’s Somerset store in late 2016. That space will close Friday. The new, 2,200-square-foot gallery, sandwiched between Apple and Macy’s anchor store, will feature a Model S and the Model X — an $80,000 SUV that shares the $70,000 sedan’s platform.

“We are excited to expand our presence in Michigan in order to educate consumers about the benefits of Tesla’s vehicles in a fun and engaging environment,” a Tesla spokesperson said in a statement. “Tesla’s new gallery at the Somerset Mall allows anyone interested in Tesla, including the thousands of Model 3 reservation holders in Michigan, to learn about our technology.”

The gallery also opens as Tesla begins production of its $35,000 Model 3, which has a backlog of over 450,000 orders. The Model 3, however, will not be on display in the new space.

In addition to the vehicles, the gallery showcases Tesla’s energy products such as solar panels, a solar roof, and energy storage unit. Like the cars, interested buyers can place orders at Tesla’s website, Tesla.com.

“It’s important that Tesla has a place here in the birthplace of the automobile,” says Joel Szirtes of Pleasant Ridge, one of the first Tesla owners in Michigan. “Everyone has heard about Tesla. Now they can see the cars and learn more about them.”

The pricey Teslas strike a sexy pose in Somerset. But the stores have not been without controversy. Tesla’s direct-to-consumer model has run head-on into state franchise laws designed to guard against manufacturer exploitation of consumers.

While Tesla has been allowed to sell directly to customers in about 20 states, it faces some form of sales restriction in most others — and is outright banned from direct sale in six states, including Michigan. The Palo Alto-based company is currently suing the state to overturn its ban.

“It’s unfortunate that Michigan law takes away rights from consumers in order to protect local car dealers,” said the Tesla spokesperson. “Tesla continues to fight against that law so that Michigan consumers can enjoy the freedom to buy cars as they wish.”

Michigan is closely watching Virginia, where Tesla was dealt a setback this summer when a judge ruled the Virginia Automobile Dealers Association could sue to prevent Tesla from opening a planned Richmond dealership.

“State laws across the country generally require large auto manufacturers to appoint independent dealers,” says economist Pat Anderson, whose East Lansing-based consulting firm works with dealers, manufacturers, and suppliers. “The economic rationale for these laws include ensuring that vehicle owners will have someone ready to service and repair these vehicles long after they leave the showroom, as well as provide recall and warranty repairs in a timely manner.”

Anderson says that franchise laws are necessary to protect consumers from the ups and downs of the industry. “Remember, it was just a few years ago that GM and Chrysler went bankrupt,” he says. “Even during that dark time, independent dealers were buying, selling, and servicing vehicles across the country. When VW revealed it had been misrepresented emissions on its vehicles, independent VW and Audi dealers kept their customers on the road.”

Tesla buyers in Michigan can take delivery of their vehicles at Tesla’s Chicago or Cleveland stores located in neighboring states that have approved Tesla direct sales.

With other electric cars coming to market like the Jaguar iPace and Audi e-Tron that will sell through traditional dealer networks, some analysts warn the Tesla brand will suffer without 50-state service infrastructure.

Tesla counters that EVs — powered by batteries and electric motors — are inherently more maintenance-free than more complicated gas-powered vehicles and that it can service customer needs even as it fights states in court for more access.

Tesla has innovated the “connected vehicle” where cars can be upgraded over the air just like a smartphone. Because its vehicles are always connected, the company says, 90 percent of issues can be identified and diagnosed remotely, allowing Tesla to notify customers of a problem and order parts in advance. Customers in Metro Detroit get free transport for remote servicing of their vehicles, and they can visit a service center in nearby Cleveland or Chicago.

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