Tag archives for tesla store
Questions about the legality of Tesla selling its electric vehicles in its own retail stores have been floating around since the days of the Roadster. Last week, the recent wranglings between auto dealer associations and Tesla stores in New York and Massachusetts were moved along in courts of law, proving once again that EVs won’t arrive without hassle.
Specifically, Automotive News reports, the Massachusetts State Automobile Dealers Association (MSADA) has filed a complaint in the Norfolk County Superior Court over the Boston-area Matick Mall Tesla store. A hearing over a potential preliminary injunction is supposed to take place this week. In this state – and others that prevent factories from owning dealerships – you can’t technically purchase a Tesla in a Tesla store. Instead, potential buyers are told to place an order on the Tesla website. Tesla says this complies with local laws. Some local dealers obviously disagree. Robert O’Koniewski, MSADA executive vice president, told AN, “They claim they’re operating under the guise of a non-sales showroom, and we call that out as an outright scam.”
Over in the Empire State, Tesla was sued in New York State Supreme Court both by the Greater New York Automobile Dealers Association and a dealer member. Here, one of the claims against Tesla is that stores owned by automakers are participating in an unfair fight, since small dealerships don’t have as big a budget for advertising and store improvements.
In 2010, the president of the Colorado Automobile Dealers Association said his feeling, “is that a manufacturer-owned store as a business model violates the spirit of the state law here. But not a single person is complaining about it, and it’s kind of a back-burner thing for us. I imagine that if we start getting complaints from our membership, we would move it up to a front-burner thing.” Guess which burner is turned on now?
North Carolina is the latest state to line up against Tesla Motors by proposing a bill that would bar direct automaker-to-customer sales within the state, the Raleigh News & Observer reports. Still, Tesla says plans to open a showroom there and has sold about 80 cars to North Carolina residents, with reservations for about 60 more.
According to Slate, a bill pushed by the state’s Senate Commerce Committee – and backed, of course, by the North Carolina Automobile Dealers Association (NCADA) – would not only prevent Tesla from opening a showroom in North Carolina, it would go as far as banning Internet vehicle sales in the Tar Heel state. We’re not sure how that would be enforced, but it would certainly crimp the success Tesla has had without using the traditional industry dealer distribution model. The bill is sponsored by state Sen. Tom Apodaca (R), who claims the goal is to stop unfair competition between manufacturers and dealers (as Slate notes, Apodaca also received $8,000 from the NCADA last year, the most allowed by law). Tesla’s vice president for corporate and business development, Diarmuid O’Connell, argues that the bill is “a protectionist move to lock down the market so we have to go through the middleman – the dealer – to sell our cars.”
Texas, Massachusetts, Minnesota and New York are among states that have so far taken issue with Tesla’s dealer-free distribution model, prompting Musk to say last month that he’d consider going to Congress to try and get factory-to-customer sales legalized throughout the country. Musk is likely emboldened by the fact that Tesla earned its first quarterly profit this year and sold more of its Model S electric vehicles than General Motors and Nissan did of their Chevrolet Volt extended-range plug-in and Leaf EV, respectively.
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By Danny King
The Automobile Dealers Association in the state of Massachusetts was denied a request for a preliminary injunction against Tesla Motors Inc., which allows the American automaker to continue operating its store in Boston.
The dealers requested the Massachusetts Superior Court for a restraining order and injunction in hopes of stopping the Tesla-owned showroom from operating. The group is now considering an appeal and other judicial remedies, but currently hasn’t made a decision as to its next step.
“Tesla looks forward to continuing to focus on advancing the knowledge of EVs in a convenient, accessible environment,” said Shanna Hendriks, Tesla spokeswoman in an email. “We remain hopeful for a positive outcome of this case.”
SEE ALSO: Tesla Sued by Auto Dealers Association
One thing is for sure, the lawsuit isn’t going to be dropped any time soon according to Robert O’Koniewski, executive vice president of the Massachusetts association.
“Dropping the lawsuit is not an option at this point,” he said. “We feel very strongly that Tesla is operating a factory store outside parameters of our franchise law and our license law, and they are operating that store illegally.”
The injunction is part of an ongoing lawsuit in both Massachusetts and New York, where members of the Automotive Trade Association believe that Tesla is operating illegal dealerships in those states. The Tesla stores, which are mainly boutiques located in shopping malls and other high-traffic areas, have come under attack even though the automaker states that they comply with federal and state laws where they operate.
[Source: Automotive News]
By Jason Siu
Tesla is no stranger to strong resistance, shall we say, from auto dealers to its unusual method of selling the all-electric Model S in certain parts of the US. A lawsuit by the Massachusetts State Automobile Dealers Association was thrown out late last year, but it was later appealed. Tesla has also been sued in New York. The company has staunchly defended its right to sell cars via its company-owned stores – or, at least, to use the stores as a way to direct potential customers to its website to order a vehicle – but it’s facing its biggest hurdle yet in Texas. The size of the problem is so Texas-sized that CEO Elon Musk spoke at the state capitol in Austin yesterday.
“Franchise dealers have an inherent conflict of interest between selling gasoline cars and electric cars.”
At issue is House Bill 3351, which was filed by State Representative Eddie Rodriguez (D), that would allow electric vehicle companies to sell their wares directly to the public and not have to go through a dealer. Musk said the issue was a matter of “life or death” for Tesla, according to the Austin Business Journal. Tesla says the testimony at a hearing on the bill was “overwhelming … in favor of Tesla.”
Musk’s point is that selling an electric vehicle is different than selling a traditional gas-powered car, and that direct sales are “the best chance a new electric car company has of succeeding.” The company’s official statement continues:
Electric vehicles simply cannot be sold side by side with gas vehicles because they will always be a minority item in terms of sales and service volume. Existing franchise dealers have an inherent conflict of interest between selling gasoline cars, which constitute the vast majority of their business, and selling the new technology of electric cars. It is impossible for them to explain the advantages of going electric without simultaneously undermining their traditional business. Simple math shows no traditional dealer is incented to sell an electric vehicle with the same enthusiasm as the rest of their inventory.
The way things stand in Texas now, the Tesla stores – excuse us, galleries – cannot offer test drives, cannot discuss the price of the car (or any financing terms) and cannot refer potential customers to out-of-state stores to actually order their cars. Tesla employees can’t be on hand when its cars are delivered in Texas and registering a new Model S sounds like a frustrating experience, if Tesla’s description is accurate, with the sales tax not being rolled into the financing payments. Oh, and there’s even a special subsidiary, Tesla Motors TX, with service centers in Austin and Houston that, “cannot advertise that they do warranty repairs nor can they discuss any additional repair needs or concerns with the customer. Tesla Motors TX then bills Texas Motors, Inc. for the work. If customers have additional warranty concerns, Tesla Motors TX cannot discuss them with the customer – the customer would need to call Tesla Motors, Inc. back and go through the process again.” Despite all the hassles, Tesla has delivered more than 400 Model S and Roadster EVs in Texas, “with more arriving every week.”
Tesla has put up an informational page as well as Musk’s blog post on the issue, if you’d like to read more. For an interesting look at why car dealerships exist the way they do in the US today, listen to this Planet Money story.
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