Tesla Motors Inc (NASDAQ:TSLA) Opens A Gallery Showroom In Michigan After Being Denied Dealership License

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Tesla Motors Inc (NASDAQ:TSLA) has opened a gallery showroom in Michigan after an application for a dealership license by the electric automaker was rejected back earlier in September. However, prospective customers can only look at the cars on display but are not allowed to buy. The Tesla gallery showroom is located in a Nordstrom, Inc. (NYSE:JWN) departmental store and is the first in the state of Michigan. The gallery showroom takes up 700 square feet of space.

For your eyes only

At the gallery showroom, the staff can answer certain basic questions but are not allowed to discuss prices or even allow prospective customers to take a test drive in the land of the free. A sign at the gallery showroom refers interested parties to go online for ordering information and product details. After buying online, Tesla’s customers can then pick up their car from Chicago, Cleveland, Columbus or other cities in their vicinity where Tesla is allowed to sell its vehicles.

Tesla has already registered its displeasure over the inconvenience its prospective customers in Michigan have to be subjected to.

“In Michigan, it’s very unfortunate that residents of Michigan have to drive to Ohio and Illinois in order to pick up their cars, in order to have their cars serviced,” Tesla’s executive vice president of business development, Diarmuid O’Connell, said at an event back in September.

Direct-sales strategy

Tesla employs a direct-sales approach unlike other automakers who sell their vehicles through dealers. In states where Tesla has been banned from using its direct-sales approach, it has operated gallery showrooms. The kind of services prospective customers can enjoy in the gallery showrooms differ from state to state. In Texas, for instance, prospective customers are allowed to take test drives and even get their cars serviced. This is not the case in Michigan. Currently there are about 400 Teslas that are registered in the state that considers itself the hub of atuomobile manufacturing in the United States.

Tesla’s stock closed Monday’s trading session having risen 2.94% to settle at $186.40 a share. Nordstrom, Inc edged up 1.17% to close the day at $57.20 a share.

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Adam Russell

Adam graduated from UCL in 1998 with an honors degree in Business Finance (BSc). He has spent the last two decades identifying undervalued companies in US markets, primarily in the healthcare and insurance industries. Outside of the financial world, Adam loves to spend long weekends fishing. Shoot me an email at [email protected]