Auto industry tesla-dealership-2

Published on November 26th, 2012 | by Christopher DeMorro

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Judge Sides With Tesla In Dealership Lawsuit, Foes Vow To Fight On

Innovation often has many detractors, and Tesla Motors has had plenty of detractors. But at least for now, Tesla has scored a key victory in the state of Massachusetts. A Bay State judge has dismissed a request by a dealership association to close a Tesla Motors “dealership” in the city of Boston.

The Massachusetts State Automobile Dealers Association (MSADA) has had their request to close a Tesla-owned showroom in Boston was denied. 48 states prohibit automakers from owning dealerships that compete with local franchises. Tesla has gotten around this by not selling any dealer franchises, and also not selling any cars at their showrooms. The “salespeople” are not paid on commission  and the only way to order a Tesla Model S is via its website. There is currently a Tesla showroom in the Natick Mall in Boston.

This has dealership lobbyists all over the country in an uproar. With their business model threatened, traditional car dealerships are trying to nip Elon Musk the usurper in the bud before his company-owned dealership idea takes off. Just about the only new product you can’t buy online these days is a new car, but Tesla showrooms direct would-be buyers to do just that.

How long before other automakers catch on and say me too? For his part, Musk says that Tesla would have less control over franchise-owned dealerships, who would likely hire salespeople who lacked EV-specific knowledge. With gas-powered cars making up an overwhelming number of new car sales, Musk thinks a new kind of car needs a new kind of sales experience.

For now, the law is on Tesla’s side. But the dealer associations aren’t likely to give up easily.

Source: Autoblog Green | Image: Michael Kappel/Flickr


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About the Author

Chris DeMorro is a writer and gearhead who loves all things automotive, from hybrids to HEMIs. When he isn't wrenching or writing, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.



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  • Andy Haer

    Your article article implies that the case was dismissed but as of two days the news was just that the initial injunction was denied and the case is still on…

    http://www.boston.com/cars/newsandreviews/overdrive/2012/11/natick_tesla_store_still_facing_lawsuit_from_mass_dealerships.html

  • http://jackb125.wordpress.com jackb125

    These franchise laws are long overdue for repeal. Many of them were written over 100 years ago and are completely out of step in a modern market. At this point, they are just plain anti-competitive, protectionist barriers to any changes with the severely outdated “dealership only” purchasing business model. Dealership businesses that typically exalt the free-market system and decry government regulations are using these franchise laws to protect this ancient, restrictive business model that was created before television, cell phones, the Internet, and e-commerce. They inject an often unnecessary middleman that ultimately raises the costs of our vehicle purchases and limits our selection of products.

    Currently these laws are being used in an attempt to shutdown the stores of Tesla Motors (manufacturer of the all electric Tesla Model S that was recently named “Motor Trend 2013 of the Year”, “Automobile Magazine 2013 Car of the Year”, “Yahoo! Autos 2013 Car of the Year”, and the only automobile listed in Time Magazine’s “25 Best Inventions of 2012″). At this time there are lawsuits against Tesla in 4 states: Illinois, Massachusetts, New York, and Oregon.

    Why are the dealerships and their mouthpiece, the National Automobile Dealers Association (NADA), in such a frenzy to shut the Tesla stores down? Why are they lobbying for even more restrictive franchise laws in Colorado specifically aimed at Tesla?

    The simple answer is that NADA and the dealerships are using political influence to protect themselves from any sort of free-market competition that may threaten their 100+ year old business model. Anyone that believes in free-market capitalism should be appalled.

    In a recent Fox News article (http://www.foxnews.com/leisure/2012/10/27/is-tesla-selling-its-cars-illegally/), the NADA chairman, William Underriner, was quoted as saying that NADA “has ‘a whole mess of lawyers in Washington’ who work on state franchise laws”. This is CRONY-CAPITALISM AT ITS WORST where a powerful group of businesses and their political lobbyests influence legislation for the benefit of a well-connected few at the expense of all the rest of us and an efficient market.

    Any Dealership that truly adds value to the process of buying a new vehicle or servicing those vehicles should have no need for the protection of a franchise law. It is painfully obvious that customers in a modern, free-market should have the choice of how they purchase their vehicles, be it a dealership, a direct manufacturer store, the Internet, or whatever.

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