Nordstrom SIS Rendering 1[UvCN]
A rendering of the Tesla store in Nordstrom department store.  Courtesy of Tesla

Tesla’s New Store is in Men’s Department at Nordstrom

Jun 15, 2016

This story has been corrected and updated. See below.

Tesla is experimenting with a new retail strategy by using the backdrop of department store Nordstrom to show off its all-electric Model X SUV.

The automaker plans to open a 400-square-foot showroom in the men's department at Nordstrom The Grove in Los Angeles. The smaller-than-usual retail space, which will remain open through the end of the year, will feature a design studio where customers can tinker with interior and trim options. Visitors will also be able to take demonstration drives with Tesla employees.

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This is the only showroom of its kind for Tesla. And while automakers have long displayed cars in malls, Tesla is the only one setting up shop in Nordstrom. A Tesla spokeswoman said there is currently no other plans for future showrooms. To be clear, this is just a showroom for now. Tesla has applied for a sales license and will sell both Model X and Model S at the location, a company spokeswoman said. The Model X will remain as only the vehicle on display.

This is the first time Nordstrom has worked with an automaker, according to Nordstrom spokesman Dan Evans, who declined to provide specifics on the financial arrangements of the partnership.

"While we admire Tesla, it’s really not about the car, it’s about offering something new," Evans said in an email. "We’re investing in lots of ways to make our stores more compelling and this is an example."

This store will only sell the Model X—at least for now. Tesla began deliveries of the Model X in September, but production and deliveries were slow to ramp up. The vehicle has had its share of problems including a recall and complaints about the doors and windshield.

Production and deliveries of the Model X have improved in the past quarter. Earlier this year, Tesla created an online design studio for customers in Europe and North America for choosing interior design details and the battery pack for the Model X. The company said in May that the Model X would be in all of its stores by the end of the year.

Tesla has a unique approach (at least within the automotive industry) to selling its all-electric vehicles. The company sells its own cars directly online and through its own branded stores, not through franchised dealerships.

It's an approach that other automakers and dealers oppose and have actively fought against. Some states, like Texas and Arizona, have banned the direct sales model. In those states, Tesla can build a showroom—or gallery as it calls it—where customers can learn about the vehicles.

U.S. state laws prevent automakers with existing franchisees from opening their own dealerships to compete with them. However, dealer associations in a number of states including Massachusetts, Missouri, North Carolina, and Washington have tried to expand the law to include manufacturers like Tesla that don’t have franchise dealers. Auto dealership associations, lawmakers, and even General Motors have stepped up efforts to end—or at least cripple—Tesla’s direct sales business model. Tesla’s has had mixed results fighting these attacks.

Tesla has a history of tinkering with its sales strategy. Last summer, Tesla set up mobile pop-up shops in various vacation spots, including Santa Barbara, Calif., the Hamptons, and in Europe. Those mobile store was made up of two shipping containers with steel beams between and a canvas roof that fit on a flatbed truck. Once it reached its destination, it unfolded to double its size in a few hours.

Correction: 5:37 p.m. ET. The story incorrectly stated it was selling cars in the Nordstrom department store. A Tesla spokeswoman said it is a showroom for now. Once its sales license is approved, it will sell the Model S and Model X.

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