Tesla says the MI law violates its constitutional right to due process and equal protection, as well as restricting interstate commerce.
The legal action comes after the state officially denied Tesla a new dealership license last week.
One legislator told Tesla that local dealers did not want its presence in the state and therefore, the company would not be allowed to operate in MI.
The Governor of Michigan, State Secretary and Attorney General were all nominated by the vehicle maker in its lawsuit.
In the latest round in a multi-year, high-stakes battle to sell its battery-powered luxury cars directly to MI consumers, electric carmaker Tesla Motors has sued state officials over a law it says creates a state-sponsored monopoly. "Tesla will continue to fight for the rights of Michigan consumers to be able to choose how they buy cars in Michigan", Tesla said in a statement.
The state has prevented Tesla from operating through the direct-sales ban and by rejecting Tesla's application for a vehicle dealer license, according to the lawsuit. The Michigan Automobile Dealers Association didn't immediately return a call.
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In Missouri, Tesla's licenses to sell cars are in jeopardy after a circuit judge ruled last month that the electric vehicle maker is not a franchisee and its licenses should not be renewed by the Missouri Department of Revenue.
Tesla's lawsuit takes aim at the heart of the dealership sales model, alleging it amounts to a state-sponsored monopoly. It said a franchised Tesla dealership could not profit from selling new cars because Tesla's uniform sales price means there is no dealer mark-up.
Instead, the FTC urged MI lawmakers to consider a "complete repeal of the prohibition on direct sales by all manufacturers, rather than the enactment of any limited, selective set of exceptions".
In an emailed statement, Tesla Europe said: "Testing done by Tesla and independent third parties has demonstrated that the Model S P85D's acceleration and motor power numbers have always been accurate, even understated".
►Q&A: Is Tesla's Autopilot feature unsafe? "Tesla's sales model has focused on educating consumers about its products and technology in a low-key, low-pressure environment".
In most cases, Tesla owns and operate showrooms where potential customers can experience the cars in person, though cannot directly purchase the cars. Other states prohibit it or allow it only under certain circumstances.