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Nessel confirms legal settlement with Tesla

Posted at 1:29 PM, Jan 22, 2020

LANSING, Mich. — Tesla will be able to sell and service its vehicles in the backyard of Detroit’s three automakers under a lawsuit settlement, a person briefed on the matter says.

The deal between the state of Michigan and Tesla is likely to be announced Wednesday, said the person, who asked not to be identified because terms of the deal haven’t been made public.

The settlement would end a lawsuit that Tesla filed against the state in 2016 over a law that banned company-owned stores and stopped Tesla from opening service centers.

The office of the Michigan Attorney General confirmed Wednesday morning that the case will be settled and dismissed upon the following agreement.

The Attorney General's Office said:

“Today the state of Michigan defendants Secretary of State Jocelyn Benson and Attorney General Dana Nessel filed a stipulation to dismiss with Tesla that recognizes that any Michigan resident may lawfully buy a Tesla and have it serviced in Michigan. The stipulation acknowledges that Tesla may: operate under existing Michigan law; sell cars to Michigan customers as long as the sales contract indicates the sale took place in a state other than Michigan; and, indirectly own service and repair facilities in Michigan through a subsidiary, Tesla Michigan.”

The agreement also would allow Tesla to deliver vehicles in Michigan, the person said. Currently buyers have to leave the state to pick up their vehicles.

Thousands of Teslas are on the roads in Michigan but must be sold and serviced out of nearby Ohio or another state.

People buying Teslas in Michigan will still have to jump through a small hoop to do so. The person says that under the deal the Teslas will have to be titled in another state and then transferred to Michigan.

Vehicles will be serviced and sold in Michigan by a Tesla subsidiary, under the agreement, the person added.

The settlement could cause other states that have stopped Tesla from selling to follow suit.

Shares of Tesla, which have more than doubled in value since last fall, rose nearly 7% to $546.10 in late-day trading Wednesday.

Tesla now has what it calls a “gallery“ at a shopping mall in the Detroit suburb of Troy, Michigan. But employees there are now barred from talking about pricing or lease terms or from completing sales deals.

Tesla sued former Michigan Gov. Rick Snyder and other state officials in September of 2016, challenging a 2014 law that ensures automakers can only sell vehicles through franchised dealerships.

The federal court lawsuit sought a declaratory judgment that the “anti-Tesla” law is unconstitutional and a court order to prevent its enforcement.

In 2016 Michigan denied Tesla’s application for a license to sell directly to consumers in Michigan, citing the law that’s backed by big auto companies and their dealerships.

Tesla Inc. said at the time it would “fight for the rights of Michigan consumers to be able to choose how they buy cars in Michigan.”

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