On Monday, May 25, Tesla opened its first store this year at the Westchester shopping mall in New York. Right from the start, NADA, the National Automobile Dealers Association, had issues with Tesla’s Apple-like store approach, while many pointed out that 48 states prohibit company-owned car dealerships.
In litigation-obsessed America, it’s no surprise that the Greater New York Automobile Dealers Association has challenged Tesla’s three NYC stores. Its lawsuit was dismissed, but dealers in New York and Massachusetts sued Tesla last week claiming it was violating franchise laws.
Elon Musk, the company’s CEO and co-founder, yesterday posted an entry on his blog dismissing the dealers’ accusations and defending the electric car maker’s novel strategy.
He wrote that Tesla doesn’t threaten the existing automobile franchise system and that it isn’t violating any state laws as it has taken “great care not to act in a manner contrary to those rules.”
Musk claimed that franchise laws prohibit factory-owned dealerships in order to avoid competition with independent dealers. This rule does not apply to Tesla, since “we have granted no franchises anywhere in the world that will be harmed by us opening stores”.
Moreover, he said that, if Tesla were to follow the existing strategy, traditional car dealers would have a conflict of interest: would they be willing to convince buyers on the merits of buying an EV, or would they simply stick with selling conventionally powered vehicles, which, after all, are the bulk of their stock?
From the consumer service aspect, which has also been challenged by the dealers, Musk pointed out that by the end of the year Tesla will have more service centers than stores, even in cities in which it has no retailers.
Last, but not least, he stressed that his company’s strategy is the way forward as far as electric vehicles are concerned. “In order to accelerate the adoption of EVs, we must be able to create and execute a business model that allows us to advance the knowledge of EVs in a convenient, accessible, no pressure environment.”
By Andrew Tsaousis
Story References: Automotive News
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