Tesla Motors Beats MADA, Allowed Direct Sales To Customers

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Tesla Motors is the only car manufacturer that sells its vehicles direct to consumers with no dealerships in the middle. Tesla cars are already priced pretty high due to the technology and the craftsmanship (though they have had a few issues here and there). The Massachusetts State Automobile Dealers Association filed a lawsuit claiming that Tesla Motors was violating laws on the books that protected car dealerships from direct sales from manufacturers.

The judge ruled in favor of Tesla Motors saying the original law was put in place to protect dealerships from their own brand and not from other brands. In other words, Chevy is not allowed to open a dealership to compete with John Smith Chevy down the road. Since there are no Tesla Motors dealerships, Tesla is not breaking this law.

State Sen. Marc Pacheco, D-Taunton, filed a bill in January 2013 to defend auto dealerships from the threat posed by the business model used by Tesla, with language that would clarify the current state law, emphasizing a “blanket prohibition” on manufacturer ownership of dealerships. Tesla has an installation at the Natick Mall promoting their cars, with a separate town-licensed location where they can test-drive the cars and buy them. But without a third-party dealership, the auto dealers association considers it against the spirit of the state law, which was last amended in 2002.

Pacheco said now that the judicial challenge to Tesla’s business in Natick has failed, the bill will be filed once more during the next legislative session, next year.
“There was a general feeling to wait for the courts to rule, that we may not need to go forward with legislation,” Pacheco said. “Now that they have ruled, obviously, the legislative alternative is the way to go. It’s just a matter of whether we will need to amend the existing version as filed or not, for the next session.”

“This could be the Trojan horse of the foreign car market coming in and utilizing this loophole to undercut the existing system that is there,” Pacheco said. “… My goal and my rationale for filing the bill are very simply, wanting to make sure that the existing part of the retail economy remains strong, and that it is not undercut by foreign imports that can come in, utilizing this loophole and eroding that piece of the economy that has been a very important part, in particular, for the southeastern Massachusetts economy.”

What do you think of Marc Pacheco’s arguments? Would the economy be threathned if a foreign car maker setup shop and started selling direct? Let us know in the comments below or on Google+, Facebook and Twitter.

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Last Updated on November 27, 2018.


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