Photo: Bloomberg West
Electric car maker Tesla has been hit with two lawsuits that question its right to sell cars directly to consumers and not through dealerships. Today Tesla co-founder Elon Musk explained why he thinks these lawsuits are absurd.48 states prohibit or restrict factory ownership of dealerships, reports Automotive News. Dealers in Massachusetts and New York used those laws to sue Tesla and try to shut down its company-owned stores.
Musk says that Tesla is not violating laws because the company’s “Product Specialists” who work at showrooms “could not sell you a car today under any circumstances.” The Model S is on backorder and “there is no inventory on site.”
Those showrooms are also unusual in that they are typically located in retail malls. Musk, admits that “many smart people have argued over the years” that Tesla should sell its cars the old fashioned way, through dealer franchises. But he believes that dealers have a conflict-of-interest in selling all-electric cars because most of their business still comes from selling gasoline cars.
“It is impossible for them to explain the advantages of going electric without simultaneously undermining their traditional business.”
As for the lawsuits, it’s clear Musk is ready to fight. He says the suits are “starkly contrary to the spirit and the letter of the law” and notes that one of the plaintiffs is a dealer that has “repeatedly demanded” it be allowed to sell Tesla cars.
“They will have considerable difficulty explaining to the court why Tesla opening a store in Boston is somehow contrary to the best interests of fair commerce or the public,” Musk writes, adding “that these franchise laws do not even exist in the rest of the world, where almost three quarters of premium sedan sales take place.”
Musk is nothing if not determined.