Tesla Motors is unlike many car companies not just because of what they sell, but how they sell it. Tesla does not have a traditional franchise dealership structure like many large automakers, instead selling cars directly to the consumer. Some state dealership lobbies have sued to stop Tesla from pursuing this business model. Dealers in Massachusetts have had a lawsuit to close a Tesla store dismissed for a second time.
The Tesla lawsuit came from the Massachusetts State Automobile Dealers Association, which sued Tesla over two “stores” the electric car maker opened in the Bay State. The MSADA argued that Tesla’s two stores violate state law, which prevents automakers from owning dealerships in Massachusetts. The lawsuit over the initial store in the Natick mall was dismissed back in November.
Still the MSADA sued Tesla a second time over a proposed store in Boston. The judge dismissed this lawsuit too, noting that this law only applied to companies with existing car franchises, not to prevent other companies from opening stores. Tesla has not franchised out any dealerships anywhere, and you can’t even buy your car from one of their “stores”; you have to go online to put down your reservation. The judge noted that the law did not intend to prevent automakers from opening shop in the state; it seeks to prevent established automakers from stepping on franchise dealerships, of which Tesla has none. Elon Musk and his crew did their research.
This is good news for Tesla, and perhaps the industry as a whole, though that isn’t to say the fight is over. Tesla is no stranger to litigation, and other dealership lobbies in other states may have firmer ground to stand on. No doubt other automakers are watching Tesla’s success in court with envy, and could be plotting their own efforts to sell cars directly to consumers. BMW has already stated that it intends to sell its electric “i” brand of EVs over the Internet as well, but most likely in Europe.
If Tesla continues to win dismissals in these sorts of lawsuits, could we see a fundamental change in the way cars are sold in this country?