Tesla locked in store battles against dealers in six states

Article by Anita Panait, on March 8, 2014

The state legislative battles between Tesla Motors Inc. and dealers continue to rage on and results could be mixed. For instance, a pro-Tesla bill in Arizona that would release the EV maker from the state's ban on manufacturer-owned dealerships has not moved. The conflict is set to continue after Tesla announced that Arizona is being considered as one of the locations being considered for the carmaker’s $5 billion gigafactory.

On the other hand, a Tesla-backed bill in Georgia might not be able to meet a legislative deadline to move forward. In Washington, Tesla and dealers have compromised. The amended bill, once adopted, will enable Tesla to freely operate and even expand in the state. Tesla has been meeting opposition from dealers in several states due its direct-selling model, which is claimed to be violating franchise and consumer laws.

Dealers contend that Tesla should comply with the same rules that other carmakers follow, fearing that the EV maker’s stores might pave way for other vehicle manufacturers to sell directly to consumers, instead of passing through them. "We have strong feelings about keeping the two separate, manufacturers and dealers," said Bobbi Sparrow, president of the Arizona Automobile Dealers Association.

Tesla executives, however, said that their stores are operating legally and that they aren’t trying to overturn the franchised dealer system. They also contend that the EV maker will collapse unless allowed to operate its own retail network. "We just want to be able to give life to this technology -- we're not on a holy mission here," said Diarmuid O'Connell, Tesla vice president of business development.

"We'll fight them everywhere we have to, but we're not out to overturn the system." Tesla-related legislations are presently active in at least six states like Arizona, Georgia and Washington, Ohio, New York and Massachusetts.

Last year, Tesla went toe-to-toe against dealers in a number of states like Massachusetts, New York, Texas, North Carolina, Minnesota and Virginia. While Tesla lost in Texas, it managed to hold at bay dealer-backed bills in Minnesota, North Carolina and New York. Tesla also managed to secure court decisions in dealer lawsuits in Massachusetts and New York. Tesla also inked an agreement enabling it to obtain a single dealership license in Virginia.

Topics: tesla, dealer

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