Published on November 26th, 2012 | by Christopher DeMorro
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.