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Tesla Motors Sued by Car Dealers in New York and Massachusetts
Tesla Motors seems to be on a roll lately with a lineup that includes not only the electric Roadster, but also the Model S sedan—which has just named Automobile of the Year, by Automobile Magazine. Even though there is a long waiting list for the Model S, not all the Tesla news is positive. Car dealers in New York and Massachusetts have filed a lawsuit against Tesla Motors for the way that it sells its electric cars, which could ultimately block Tesla from selling its cars in the two states.
The car dealers in New York and Massachusetts have filed a lawsuit against Tesla Motors, citing state franchise laws that requires automakers to sell their cars through dealerships that they do not own. Tesla Motors is unique in the fact that it does not have traditional dealerships in the U.S. Tesla Motors sells its Roadster and Model S through a small handful of company-owned stores that look more like an Apple store than a traditional showroom.
“Those dealers are investing millions of dollars in their franchises to make sure they comply with their franchise agreements with the manufacturers. Tesla is choosing to ignore the law and then is choosing to play outside that system,” stated Robert O’Koniewski of the Massachusetts State Automobile Dealers Association.
Tesla Motors claims that it is not breaking the law, but since they do not use a traditional franchise system, dealers are worried about how it would change the car buying process once Tesla becomes more mainstream. If Tesla’s factory-owned stores kick off, it could open the door for other automakers to find ways to sell cars in the same way, which would put dealers at a disadvantage.
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