Tag archives for lawsuit

Massachusetts dealers appeal ruling in Tesla store case

Massachusetts auto dealers are not taking “no” for an answer when it comes to Tesla Motors. On Tuesday, the Massachusetts State Automobile Dealers Association and other dealer plaintiffs filed an appeal after a court dismissed their lawsuit against Tesla’s factory-owned stores on December 31, 2012.

The lawsuit was initially filed by MSADA in October, and by year’s end, Norfolk County Superior Court Judge Kenneth Fishman ruled that the plaintiffs lacked standing to sue. This suit followed a similar lawsuit filed in October where the MSADA requested the court block an opening of a store by Tesla in a suburban Boston mall. Tesla won approval to open the store in Natick, MA, which fueled the second lawsuit.

Dealers are pointing to a 2002 Massachusetts statue that gives dealers and their association the right to sue to prevent manufacturer-owned stores, Robert O’Koniewski, executive vice president of the dealers association, told Automotive News in an email. “Tesla is spending considerable sums of money across the country in an effort to exploit what they see to be gaps in states’ franchise laws,” O’Koniewski wrote. “The law is the law. Follow it.”

Tesla didn’t respond to a request for comment. Tesla previously has said that it’s being very careful about complying with state laws. The stores are there to educate the public, and when it comes time to selling the car, it’s all being done online.

“People will be walking down the mall and they’ll see a car and they’re drawn in by that…,” said George Blankenship, Tesla’s vice president of sales and ownership experience, in an interview with SmartPlanet. “We’re educating, not selling. It’s two different things.” So far, so good for Tesla Motors. But the jury – as it were – could still be out.

By Jon LeSage

Wheelies: The Eastbound Edition

Volvo and its parent, Geely, are expected to announce a joint partnership in March. Above, Stefan Jacoby, the Volvo president and chief executive, introducing the Concept Universe sedan at the Shanghai auto show last April.Carlos Barria/ReutersVolvo and its parent, Geely, are expected to announce a joint partnership in March. Above, Stefan Jacoby, the Volvo president and chief executive, introducing the Concept Universe sedan at the Shanghai auto show last April.

In which we bring you motoring news from around the Web:

• Volvo is expected next month to announce a joint partnership with its owner, the Chinese manufacturer Geely, to build cars for the Chinese market. Though Geely holds a majority stake in the Swedish automaker, Volvo must partner with a local manufacturer to legally produce and market its cars in China. If approved, the joint venture would base its operations in Chengdu, located in China’s southwest. (Bloomberg)

• Smith Electric Vehicles, the Missouri-based producer of purely electric commercial vehicles, recently announced its intention to form a joint venture with Wanxiang Group, one of China’s largest automotive component manufacturers. Wanxiang would initially invest $25 million and, under the terms of the venture, up to a further $75 million to produce and commercialize the vehicles in China. Smith, with international clients like PepsiCo and Coca-Cola, recently announced its plan to open an assembly plant in the Bronx. (Smith Electric Vehicles)

• General Motors has appointed Jon Lauckner as its new chief technology officer, effective April 1. He will replace Tom Stephens, who recently announced his retirement. Mr. Lauckner, currently the president of G.M. Ventures, the venture capital arm of the conglomerate, was also tipped to assume leadership of Research and Development for G.M., a responsibility held by Alan Taub, who also recently announced his retirement. (General Motors)

• Former Nascar Sprint Cup driver Jeremy Mayfield was charged this week with three felony counts of theft stemming from a search that took place at his home in North Carolina last November. In his defense, Mayfield said the charges were based on statements from a source with a substantial criminal record. Mayfield was suspended from Nascar after failing a drug test in 2009. (ESPN, via The Associated Press)

• An amended libel charge brought by Tesla Motors against the BBC, the producer of the television program “Top Gear,” was dismissed by a London judge on Thursday. The electric vehicle manufacturer initially sued the broadcaster in March after a “Top Gear” segment aired in which the Tesla Roadster was said to have achieved 55 miles of range on the program’s test track, significantly less than the 200 miles or more claimed by Tesla. An earlier libel charge brought by Tesla was dismissed in October last year for being insubstantial. (Top Gear)


Tesla Retail Stores Defended by Brand CEO

Elon Musk, tech mogul and co-founder of Tesla is coming to the defense of his company as it faces a lawsuit from dealers in Massachusetts and New York.

They allege the Palo Alto, California-based electric-car maker is violating franchise laws that forbid factory-owned stores, something that’s restricted or prohibited in 48 states. Naturally, Musk denies this claim. In a blog post he said the company has taken “great care not to act in a manner contrary to those rules.” He backs up this assertion with several arguments.

The first point he makes is that most dealerships have an inherent conflict of interest. Pushing consumers toward electric cars undermines the sales of traditional vehicles, which is the majority of their business. Tesla, of course, does not have this problem.

Another one of Musk’s arguments centers on franchise laws. Factory-owned Tesla dealerships cannot unfairly compete with franchised dealers because there are no franchised Tesla stores, therefore no harm can be done.

One of his last points has to do with the location of Tesla dealers. By putting them in high-traffic areas like shopping malls Tesla hopes it can reach potential customers before they decide what kind of car to buy. The stores are staffed by non-commissioned salespeople are there to educate consumers. Vehicles are purchased from the company’s website.

By Craig Cole

Tesla loses court battle with former exec, faces further class action

David VespremiThe wheels of justice grind exceedingly slow and fine, but, if you’re demonstrably in the right, and have (a lot) of patience and a capable lawyer, good things can happen. An example of this might be a particular David versus Goliath Tesla case that has just been resolved.

David Vespremi, former director of communications for the California automaker (and new Epic Torq owner) was part of a mass firing, which ousted Tesla co-founder Martin Eberhard called, at the time, a “Stealth Bloodbath” in which 26 employees were let go at once without advance warning. Unwilling to take what seemed like a wrongful dismissal lying down, Vespremi and his legal representative Yosef Peretz took his case to the courts. A similar situation is playing itself out over at Fisker Automotive, where recent sudden layoffs have triggered a federal lawsuit over alleged violations of the US Worker Adjustment Retraining Notification (WARN) Act, which mandates a 60-day notification period before mass layoffs.

In any case, after five long litigious years, Vesprimi has just received word that the court has found in his favor as regards to his entitlement to 10,000 shares of stock options. This translates to $207,000 in cold, hard cash.

While Tesla will certainly be happy to put this case behind it – the company has, no doubt, already spent far more than the final award on the proceedings – it still faces further fallout from the decision.

With the principles of its obligations to former employees vis-à-vis stock options now established, it faces a further class action suit filed on behalf 99 other former workers with carbon-copy claims. While that may add up to a significant out lay for Tesla, it might find comfort in the fact that at least some of that money may very well find its way back in the form of orders for more of its Model S.

We have asked Tesla for a comment on the situation, but did not get a response before publication. We will update this post when we hear back.

*UPDATE: Tesla says, “We don’t comment on pending litigation.

By Domenick Yoney

XP Technology sues DOE over advanced vehicle loan rejection

The US Department of Energy has been sued in US court by a company that it denied a loan to in its Advanced Technology Vehicles Manufacturing program. San Francisco-based XP Technology is charging the DOE with “corruption and negligence” for the way it handled the approval for loan process.

XP Technology is looking for funding to develop its battery and hydrogen fuel-cell powered car that has body panels made from expanded foam. The compact car would weight around 1,500 pounds, less than half the weight of similarly sized electric vehicles such as the Nissan Leaf. It’s powered by small, removable cartridges that can be quickly swapped by owners or recharged at home. XP Technology has been granted several patents covering the technology inside the vehicle, but it’s yet to build the car.

This is the fourth time the company has been turned down for DOE loans through the ATVM program. Two of the loan applications were for $25 million and two were for $45 million; two other applications are still pending. The company says that it was previously given a $1 million grant from a previous DOE program to help develop a hydrogen storage system used in its vehicle.

So far, funds from the $25 billion ATVM program have only gone to Ford, Nissan, Tesla and Fisker. XP is alleging that other startup electric vehicle makers such as Bright Automotive and Aptera Motors had their application reviews intentionally stalled to force them out of business and protect favored players. Bright Automotive and Aptera Motors have both filed for bankruptcy. Published reports are also cited in the lawsuit criticizing other DOE loans including the now-bankrupt solar energy company Solyndra. XP is soliciting other companies to join it in the lawsuit. In 2009, when the first DOE loan was rejected, XP was looking for support from the public.

XP’s latest complaint was filed recently with the US Court of Federal Claims, and was denied. The company plans to have it re-filed through an attorney, and the suit will seek an injunction freezing all DOE loans programs until a new approval system has been established.

By Jon LeSage

NADA asking to meet with Tesla over retail store legal questions

Tesla Model S

In this case, NADA certainly doesn’t mean “nothing.”

The National Automobile Dealers Association (NADA), which represents 16,000 new-vehicle dealers, is looking to meet with executives at Tesla Motors over the company’s decision to have only company-owned dealerships and no franchised sales, Bloomberg News reported.

NADA also said it would provide legal support for dealers suing the luxury electric-vehicle maker. Dealer groups in Massachusetts and New York have both sued Tesla, alleging that the company is violating state laws that prohibit automakers from owning dealerships. One plaintiff is a dealer that sells Fisker extended-range electric vehicles and is believed to be seeking a Tesla franchise. Tesla chief Elon Musk recently defended the company’s sales strategy and setup.

Musk argued that a traditional dealer would have a conflict of interest if he also sold more conventional vehicles. Musk also said that the nature of the Tesla involves more extensive knowledge of the vehicle than typically expected at a dealership, and that most conventional-car buyers walking into a dealer with Teslas wouldn’t buy the EV anyway.

Related GalleryTesla Model S: Quick Spin

By Danny King

Tesla Wins License to Sell Cars in Boston Suburb

Despite irking the National Automobile Dealers Association and being slapped with lawsuits, EV maker Tesla won a license to sell cars near Boston.

Unlike most automakers, Tesla use boutique retail locations to promote its vehicles, circumventing traditional dealer networks. It’s a strategy that seems to be paying off for the niche company, which is a rare instance of a seemingly successful startup in the car world. That game plan hasn’t gone unnoticed.

SEE ALSO: Tesla Future Touchscreen Tech Hinted by Exec

Earlier in the year, Leonard Bellavia, an attorney who specializes in working with auto dealers said “the idea that they’re reinventing automotive retailing is somewhat laughable,” but it seems the joke was actually on Tesla’s naysayers.

Far from feeling intimidated, Tesla sales vice president George Blankenship smiled and said the brand isn’t worried about the lawsuits while talking with AutoGuide.

Tesla won approval for its license by a four-to-one vote for a license in Natick, which is just outside Boston. However, there are conditions. The company is required to transfer its lease on the property to its Massachusetts subsidiary.

The approval “will enable us to provide the residents of Natick and surrounding areas with a complete experience that will take them from initial education and information about EVs to the purchase, delivery and service of their Tesla vehicle if they choose to buy one.”

By Luke Vandezande