Michigan Rejection Hinders Tesla Shift to Traditional Distribution

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The State of Michigan, long-time home of the car industry, told Tesla Motors Inc. (NASDAQ: TSLA) it could not open a car dealership, which is a blow to its efforts to move toward traditional distribution.

The Wall Street Journal said about the Tesla dealership rejection:

“The license was denied because state law explicitly requires a dealer to have a bona fide contract with an auto manufacturer to sell its vehicles,” Ms. Dávila Gendreau (a state spokesman) said.

Tesla has discovered that its novel approach, which makes customers buy their cars online and have them fixed in places often far from their homes, has limitations, particularly when the Model 3 gets into the hands of hundreds of thousands of drivers.

The new “boots on the ground” approach also makes it much easier for consumers to actually, conveniently see and test cars before buying.

The move comes just as the new Chevy Bolt from General Motors Co. (NYSE: GM) hits the market. Considered worthy competition to the Model 3, it will be sold and serviced by Chevy dealers, one of the largest networks in the country.

Just as Tesla goes traditional, traditional forces shut it down.