Tesla has been facing resistance from dealer associations with its factory-owned dealerships since the start-up automaker first started selling cars, but it won another big case in Massachusetts when a judge dismissed a lawsuit brought on by the Massachusetts State Automobile Dealers Association (MSADA). According to Automotive News, the case was dismissed after the judge said the association "lacked standing to sue" despite the fact that MSADA executive vice president quotes the state law as saying, "A factory cannot own a store."

The latest lawsuit follows a similar suit from back in October where the MSADA attempted to prevent Tesla from opening a store in a suburban Boston mall; the electric car maker received approval to open another store in Natick, MA, which brought on this second lawsuit. It's unlikely this is the last we've heard about this issue in Massachusetts and in other states, but Tesla seems to be coming out victorious in each case so far. While laws pertaining to dealerships vary state to state, factory-owned dealers are usually noncompliant with state law – a lesson Chrysler learned back in 2011.


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  • 94 Comments
      • 1 Year Ago
      [blocked]
      Raphymartinez
      • 1 Year Ago
      Makes sense, if Tesla has no dealers and doesn't plan on having any they aren't harming anyone by selling the cars themselves. But the big question will be, what are they going to do with all the trades?
        Vlad
        • 1 Year Ago
        @Raphymartinez
        Anybody trading in their car at a dealership with a Carmax location in driving distance is losing thousands of dollars.
      LEONARD
      • 1 Year Ago
      Even a better case for Tesla stores, some Gm dealers will not sell the volt because of tool cost for that model of car. when your the factory store its a non issue.
      kEiThZ
      • 1 Year Ago
      Good. The sooner that car dealerships are eliminated the better. Perhaps there was a time when dealerships made sense. Today? Not so much. Dealerships today are nothing more than get-rich quick schemes for those connected to the old boys network. Cars aren't much more than commodities. And they need very little real effort to sell. Give customers the facts on your product and if the product is good, that's all you need. Tesla gets this. There's no way, conventional car salesmen could offer anything close to the experience that Tesla offers in their stores. Hopefully, the major OEMs learn this and work all out to ditch franchises and go to OEM owned stores. They'll still have sales people. They just won't have greedy franchisees.
        Avinash Machado
        • 1 Year Ago
        @kEiThZ
        Good points.
        nassau
        • 1 Year Ago
        @kEiThZ
        Sounds like a refrain from the USSR, and the Obama war on all who disagree.
          kEiThZ
          • 1 Year Ago
          @nassau
          What is communist about what I said? Please explain using actual economic definitions and not rhetoric. If anything, it's car dealers that distort the free market. What function do they serve today beyond rent seeking by any classical definition? Why can I not buy a car directly from the OEM? Why do I have to go through a dealer?
        Marcopolo
        • 1 Year Ago
        @kEiThZ
        kEiThZ You may be right, the internet may have removed some of the reasons for dealerships. But I think you will agree that there is always two sides to every issue. Imagine that all dealerships were company owned. The local dealer would not be an independent local businessman, but a company manager. Local community involvement would disappear. The company would decide one standard price, there would be no competition between dealers, so no 'specials'. The company would set the price for your trade-in, and local manager would have little or no, authority to negotiate a better price. Handing over the retail operation of the auto-industry, may have unforeseen circumstances. You might hate your local car dealer, but do you think a manager appointed by Detroit, Japan or Germany would be better ? I don't know either, but it's worth considering, isn't it ?
          Letstakeawalk
          • 1 Year Ago
          @Marcopolo
          " How hard is it to authorize OEM delaerships to sponsor a few little league teams in their area every year?" Great question. I suppose we'll see what Elon does. (of course, shareholders might take a different view)
          kEiThZ
          • 1 Year Ago
          @Marcopolo
          Marcopolo, I think most people would be surprised to find out that dealers offer anything substantial in terms of competition. The bigger issue is competition between manufacturers. I'm okay with less dealer competition and more competition between OEMs. As for community involvement, it's BS. It's really nothing that the manager at an OEM dealership could not undertake. How hard is it to authorize OEM delaerships to sponsor a few little league teams in their area every year?
        Tysto
        • 1 Year Ago
        @kEiThZ
        My brother's a car dealer, and I have yet to find that he or any other dealer I talk to can even quote the horsepower of the cars they sell. They might as well be selling blue jeans and socks in a clothing store.
      Joeviocoe
      • 1 Year Ago
      Elon Musk tweeted today... "Nice story about a Model S coast to coast road trip. By end of year, it will be Superchargers all the way!" http://t.co/mivPyxrj He really plans to cover the U.S. coast to coast with Supercharger stations. :)
        • 1 Year Ago
        @Joeviocoe
        [blocked]
      raktmn
      • 1 Year Ago
      I'm mixed on this. On one hand, I'm hoping the savings of Tesla having their own stores will be passed onto the customers. On the other hand, if Tesla refuses to negotiate on price because they have a lock on every single dealership and operate as a monopoly, it worries me that they could use that monopoly power to price gouge buyers. It would be nice if Lexus, BMW, Mercedes, Porsche, Audi, Cadillac, etc would start competing in this market segment of powerful luxury EV's in order to put market pressure on prices. Fisker, Chevy, Nissan, etc just aren't fulfilling that role right now.
        Making11s
        • 1 Year Ago
        @raktmn
        Can we really label something as a monopoly if there are a number of competing products to choose from? Scion does the "no haggle" price thing even though it has independent dealers, so clearly having independent dealers doesn't guarantee flexible pricing. How would manufacturer owned dealerships differ from an exclusive distribution deal with an independent dealer? No one would question the legality of that. It happens all the time. Cable and phone providers have much less competition than Tesla or any other automaker. If government wants to protect consumers from abusive, monopolistic business practices, they should go after industries where there actually is no competition. These are just greedy dealers who feel entitled to a piece of someone else's success.
          raktmn
          • 1 Year Ago
          @Making11s
          That's my point. If you don't want a Scion, you can go down the street and buy a Hyundai or a Honda or any of a long list of similar competitors with similar products in a similar price range. That keeps Scion from blowing their "no haggle" prices through the roof, regardless of whether they are indy dealers or corporate stores. That kind of check doesn't exist for Tesla right now, so I'm just saying that being able to negotiate price between truly independent dealerships is the only other way to have any check on Tesla prices. Don't get me started on Cable and Phone providers in the United States. You should read up on how many european countries handle these sort of suppliers compared to the US. Here the providers own a little chunk of your land, and they think you owe them something. Over there, you own your own land, and you choose who gets to use it. We could do much better and pay much less if we changed our laws for Cable and Phone too.
        Grendal
        • 1 Year Ago
        @raktmn
        Tesla will have exclusivity for a while longer but eventually all the other manufacturers will jump on Tesla's bandwagon and sell something similar. I'd give Tesla five years of being the exclusive top dog of EV's and in ten years there will be some serious contenders. Hopefully Tesla will have solidly established themselves as a brand by then.
          Grendal
          • 1 Year Ago
          @Grendal
          Considering what they are making and the price they are selling it at, I sure don't see where they are pocketing bucketloads of cash because of there enormous profit. The price seems about right for what you get. If they start gouging the price in the future, you always have the choice to not buy one.
          Val
          • 1 Year Ago
          @Grendal
          a company that offers a unique product and charges whatever price it wants IS EXACTLY a market force in play.
          raktmn
          • 1 Year Ago
          @Grendal
          I hope you are right, but I want to buy a Tesla in less than 5 years, and I don't want to get price gouged. Right now the only protection I have against that is Tesla's good will. I like Tesla and all, but this is a cold hard financial issue. There are very little market forces working right now when it comes to Tesla's prices. The only push-back buyers had against the recent price increase was to finalize your order. That won't work for me because they don't even sell the model I really want yet. I don't like being at the mercy of any company's good will. I prefer having market forces in play. Either via a competing company, or between competing Tesla dealerships. We'll see how it plays out.
      Drakkon
      • 1 Year Ago
      You own a dealership for the purpose of owning a parts counter and service department. The sales pays the taxes and utilities profits come from parts and service. If Tesla does all its service on site, the dealers have nothing to gain anyway. This is an attempt to get the state to kill competition on the dealers' behalf.
      Electron
      • 1 Year Ago
      Glad to hear the lawfare against Tesla is unsuccessful so far. The "lacked standing to sue" seems to indicate that the judge deems MSADA not to be sufficiently harmed by Tesla's action to support its participation in the this case, which makes sense since neither it nor any of its membership dealerships are at risk of being harmed in anyway by factory owned stores since Tesla doesn't have any franchise dealerships. One wonders what these lawsuits are really about if there aren't any dealerships at risk of unfair competition by factory owned stores.
        MTN RANGER
        • 1 Year Ago
        @Electron
        Yes, the dealer associations are freaking out because if this becomes precedent, they are in a whole lot of trouble. State laws are bound to change.
          JakeY
          • 1 Year Ago
          @MTN RANGER
          Actual from the ruling, they won't really be threatened by this setting a precedent. Tesla won because it had no existing franchises in the state (or anywhere else really). For other companies which already have existing franchises (which the dealer associations represent), it's not going to apply. What this is really about is manhandling Tesla into giving a cut of their profits to dealers (with no work needed to be done by them, since Tesla already has a long reservation list).
        Letstakeawalk
        • 1 Year Ago
        @Electron
        I suppose the Dealer Association will have to ask the State AG to file a suit, based on the possible violation of state law. Whether or not the AG office is up for that, who knows.
      Marcopolo
      • 1 Year Ago
      Careful reading of the Judges ruling reveals that His Honour limited the judgement to the issue of standing. The Judge found that since no dealer sold Tesla products, they had no standing. An excellent way out of the quagmire of trying to interpret old legislation which could not have foreseen the revolution of the internet. However, it's shifted the matter back to where it properly belongs, in the hands of either the states Attourney-General, to prosecute Tesla, or the Legislature to amend the legislation, one way or the other.
        Letstakeawalk
        • 1 Year Ago
        @Marcopolo
        As I said below, it will be interesting to see if the AG decides to take the case.
          Letstakeawalk
          • 1 Year Ago
          @Letstakeawalk
          "...or the law should be repealed as outdated and ineffective." That almost never happens. Out-dated laws generally just don't get enforced, rather than repealed.
          Marcopolo
          • 1 Year Ago
          @Letstakeawalk
          @ Letstakeawalk Sad, but true !
          Marcopolo
          • 1 Year Ago
          @Letstakeawalk
          @ Letstakeawalk Yes indeed, but it's really a matter for the legislators. Either the law is valid and effective and any descriptive loopholes should be closed, or the law should be repealed as outdated and ineffective. But that's a matter for elected representatives to decide.
      PeterScott
      • 1 Year Ago
      Glad that sanity is prevailing on this so far. Of course real sanity would not be bringing dubious lawsuits attempting to interfere with your competitions lawful business.
      turbomonkey2k
      • 1 Year Ago
      This is what I've been saying all along. The SPIRIT of these laws is to protect a franchisee of a particular brand from the manufacturer opening a shop down the road and selling the same or even a slightly different version of the same product. Tesla has no such franchisees that need protecting and as such if Tesla wants to have complete control over the purchasing experience then by all means let them. One thing is certain though. Should Tesla ever actually catch on they inevitably adopt a similar model to what everyone else does. Something tells me though that they aren't likely to ever be more than a niche producer.
        • 1 Year Ago
        @turbomonkey2k
        [blocked]
          Grendal
          • 1 Year Ago
          Ultimately, I don't think Tesla is out to damage or hurt the dealers in any way. They just want to be able to do what they're doing without getting squashed by the dealership system. It's a very fine line that Tesla is treading and it borders on the issue that the dealership network was created to protect the dealerships from.
          turbomonkey2k
          • 1 Year Ago
          You're missing the point. They don't HAVE any dealers. THEY OWN ALL THEIR OWN STORES.
          Letstakeawalk
          • 1 Year Ago
          "By the letter of the law, Tesla can actually own any number of dealerships for a period not to exceed 1 year." And what will happen at year's end? I've said it in other posts... this is a really good way for Tesla to open and close dealerships on a whim (or based on solid business decisions). The "Store" in Natick not doing so well this year? Shut it down, move the operation down the road... Other automakers would give their eye teeth to be able to shut down ill-performing Dealerships, but the current law prevents them from doing so. You can be sure that GM and VAG lawyers are watching this case closely, and praying that Tesla is successful.
          • 1 Year Ago
          [blocked]
          • 1 Year Ago
          [blocked]
          Letstakeawalk
          • 1 Year Ago
          "It's the cost of doing business." Sure it is. However, by incurring those costs *every year*, Tesla won't be doing themselves any favors. At least a traditional Dealer can buy land, instead of signing a lease every 12 months. I'd still like to see the license that Tesla was granted - specifically where they say their "Dealership" is located.
          Letstakeawalk
          • 1 Year Ago
          "At year's end, it's obvious: Telsa closes the one dealership and opens another one." What a paperwork headache, continually applying for new licenses every year, and continually finding new business locations...
        Val
        • 1 Year Ago
        @turbomonkey2k
        your one thing is not certain AT ALL. The stupid idea that a company sells a car to a dealer at a 20% discount from the inflated MSRP, then the dealer sells it to you at 10% off MSRP so you feel special is ridiculous and there are plenty of examples abroad where a car company can own dealerships. There is no magic sales threshold that suddenly makes it "better" to have franchised dealers instead of company owned stores.
      • 1 Year Ago
      [blocked]
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