Tag archives for legal

Tesla gains legal ground in New York dealer fight

Tesla Model S

Tesla Motors gained a legal victory in its continuing efforts to expand sales across the US now that New York Supreme Court Justice Raymond J. Elliott III decided that local dealers will not be allowed to cite the Franchised Dealer Act as a reason to sue competitors, Automotive News reports.

Tesla has been embroiled in a legal tussle in the Empire State (and others) since last October, when New York dealers sued Tesla in an effort to get the California-based company to shutter the state’s company-owned stores. Tesla operates three stores and two service centers in New York.

Tesla has long argued that it should be allowed to operate its own stores because of the different nature of cars like its Model S and the fact that servicing those vehicles is simply different than working on conventional vehicles. Traditional laws dictate that car sellers be franchises that are independent from automakers.

Tesla chief Elon Musk was in Texas this week lobbying for a law that would allow electric vehicle companies to sell their cars directly to the public. He hinted Tesla could build a factory in Texas, the state with the second-highest number of publicly accessible charging stations to (after California), at some point in the future.

Related Gallery2012 Tesla Model S: First Drive

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By Danny King

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

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.

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By Danny King

Elon Musk: Tesla could go federal with franchise dealer fight

Tesla Model S

Mr. Musk Goes to Washington? Jimmy Stewart references aside, that’s the approach Tesla Motors chief Elon Musk may take in his crusade to get factory-owned dealerships legalized.

Musk tells Automotive News that he may go to Congress in an attempt to take on the country’s auto-dealer groups in order for his company to own all of its distribution channels. Musk’s main argument is that there is a conflict of interest when one dealer sells battery-electric vehicles and gas-powered ones and that the hyper-advanced technology of cars like the Tesla Model S need special explanations. This is why traditional franchise dealer models won’t work with Tesla, at least while sales numbers are still relatively small. Once Tesla EVs account for one percent of all US new-car sales, Musk says, a mix of company-owned stores and franchises would suffice.

“It’s really difficult for a new company with a new technology to be franchised,” Musk told Automotive News. “It’s not possible to effectively sell a new technology like electric vehicles, for a dealer to do that, without undermining the story behind gasoline cars.”

So far, Tesla has taken on states such as Massachusetts, Minnesota, New York and, most recently, Texas. Tesla recently gained a legal victory when New York Supreme Court Justice Raymond J. Elliott III wrote that dealers couldn’t cite the Franchised Dealer Act as a motive to sue competitors. New York dealers last fall sued Tesla in an effort to get the company to close its company-owned stores. This patchwork strategy isn’t appealing to Musk in the least. He told AN, “If we’re seeing nonstop battles at the state level, rather than fight 20 different state battles, I’d rather fight one federal battle.”

Related Gallery2012 Tesla Model S: First Drive

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By Danny King