Tesla Faces Dealer Opposition To Opening New Store In MA

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Tesla Motors gallery in Houston Galleria, opened October 2011, with Model S on display

Tesla Motors gallery in Houston Galleria, opened October 2011, with Model S on display

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This week has been a pretty good one for Californian automaker Tesla: it has shipped its first two production 2012 Model S sedans, announced a 45-day tour, and even sold out of its 2013 Model S Signature Edition sedans

But in Massachusetts, the luxury car maker faces an uphill struggle to open a dealership there.

According to the attorney representing the Massachusetts State Automobile Dealers Association, the license selectmen approved for Tesla Motors should be revoked before it opens a new Mall store in Natick, MA. 

The opposition to the Tesla store appears to stem from the claim that Tesla has not proposed to offer service facilities near the proposed Tesla store “at any time in the forceable future,” something which is required by state law for any auto dealer. 

“We want to ensure that Tesla complies with all the same requirements that our new car dealership members are required to comply with,” attorney Scott Silverman said to a local news site. “We want to work with the town to make sure everyone is treated fairly.”

In Massachusetts, dealers have to do three things in order to obtain a license to sell new vehicles. 

Be an agent of a new vehicle manufacturer or have a contract with a manufacturer to sell new vehicles. 

Tesla Model S Alpha build

Tesla Model S Alpha build

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Sell used cars as an incidental or secondary part of the business

Have repair facilities on site that allow repairs to vehicles under warranty.

Those arguing against Tesla’s license claim its proposed site -- a downtown shopping mall store normally prohibited by zoning laws -- prevents the latter criteria from being met. 

But the opposition is also likely to stem from entrenched opposition to automakers selling their cars directly to consumers, something prohibited in almost all U.S. states after successful dealer union campaigning in the 1920s. 

Even in the states where it is allowed by law, automaker-owned dealerships like the Tesla-owned stores, are often met with strong opposition from traditional auto-dealers. 

Will Tesla get its store in the Commonwealth of Massachusetts? Only time -- and we hope due process -- will tell. 


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Comments (30)
  1. I'd say those laws were made for gas powered car dealerships - not
    electric. Tesla has other dealerships where service is provided at a different site - the cars are moved from the Tesla dealership to that other site, or presumably go there in the first place. So what's the problem? Why should there be a requirement that a dealership must also provide the service itself at that same location? That's simply nutty. Typical silly law meant "To protect the consumer." From what?

  2. It is a silly argument. There is plenty of room at the Natick Mall, or nearby, to add any type of service needed. Sears has provided Auto Service at malls for a long time.

  3. Sears has a large shop in the Natick Mall (which was named the Natick Collection until last July: http://en.wikipedia.org/wiki/Natick_Mall) -- maybe Tesla can contract with Sears to provide the required service, or at least the space for Tesla-trained personnel to work?

    I certainly hope that we can get a Tesla dealership here in Massachusetts!


  4. It's a small state, pretty easy for people to drive elsewhere if they want to buy a Tesla. Less tax revenue for the absurd rule state.

  5. That's right. If my state want to force me by law to buy from a dealership, I will go out of state to buy my car and my state will loose the taxes on the sale. So that would be a stupid law to enforce or push on people.

  6. @James: When was the last time you DID buy a new car? In what state did you buy it? What was the process?

  7. I bought my 05 Mustang in West Virginia and I bought my 96 Olds in California and registered it in West Virginia. To register both of them, all I had to show was a purchase order with the car's engine number on it. West Virginia got the sale tax from the Mustang but they didn't get the sale tax from the Olds.

  8. Voting with your wallet is the only way to get your point across these days, so good on you James.

  9. That would be illegal in PA where you pay sales tax on the out of state purchase when you register it.

    WV is a great state, then, for buying from out of state if they don't bother to collect such sales tax. They also have really good electric rates in WV so EVs bought in NY or PA should be a great bargain there.

  10. Used to be a Chevy dealership in Massachusetts with absurdly low prices. They would bring in buses with people from NY that would buy cars and bring them home.

    I don't think Chevy liked this very much because they preferred delivers to service what they sold, and this dealership what just pushing sales. They wouldn't let you test drive either.

  11. Tesla has galleries not dealers, or even stores. Tesla has cars to gawk at, information to glean, and drives to arrange - at the galleries. But no sales, those are online.

    Tesla will continue to build their gallery, fight the legal battle, and try to get their occupancy permit to open on time, while selling cars online.

  12. @Jeff: In many states, it is *illegal* for a carmakers to sell a car directly to a buyer, whether online or offline.

    State laws of long standing, backed by state auto-dealer lobbying groups, require that sale to be transacted through an independently owned third-party distributor, e.g. a car dealer. That's a fact that Tesla cannot get around.

  13. John, how can a state know if you bought your car online or went out of state to buy your car? I can't see how they can enforce that law in this computer age. Buying your car online can save you as much as $10,000.00. Everything I can buy online, I do because it saves me a lot of money and I am not breaking any of my state's laws by purchasing items online. A car is an item you can purchase on line and it doesn't matter who is selling it. So how is Tesla breaking the states laws by selling their cars online? The laws shouldn't force people to buy from a dealership; that should be against the law.

  14. Because, James, you have to REGISTER that new car in some state to be able drive it on anyone's roads. And when you go to register it, you have to present a bill of sale from someone or something to the DMV. I don't know how it's enforced, but I expect that in many states, you have to produce a document on some form or with some ID number or something that indicates the sale of a new car from a legitimately-approved, legal dealer in that state to register the car.

    That's how.

  15. There is still a way around this... I bought my Prius on eBay from some "dealer" located in Chicago - I live in Detroit. Bill of sale was an email printed from my printer and title was mailed directly to my bank. My bank then mailed me a document I presented to the Secretary of State to register.

  16. Oh...welll...umm....

    Given a computer, a phone line, and some imagination, folks have gotten around, not quite everything, but fairly close.

  17. create an independent company spun off from Tesla Motors Inc, called
    Tesla Sales Inc, every shareholder of record gets a share in TM gets a share in TS. Have interlocking directors and there you go.

  18. Why are we not complaining about inane 70-80 year old laws, and apparently some newer ones, that harm innovation and creativity? I'd like the ability to buy a car totally online after visiting a showroom and taking a test drive.

  19. Heck, just move the dealership slightly north to Nashua, NH. That's where I always bought my cars when I lived in Billerica, MA. Better price, lower tax, etc.

  20. Toys-R-Us sells electric cars at the Mall. Not really much difference but the size, performance and price.

  21. @Bill: Oh, RLY? It's been quite a while since anyone attempted to take an electric car they bought at Toys'R'Us and license it for public road use. I'd say there's actually rather a lot of difference in that respect ... not to mention the "size, performance, and price" you noted.

  22. I see kids driving those toys down the street every day...lol
    but I get your point John.

  23. I know Bill, I am not sure why he said that,.. humor, off day. He actually worked for Azure Dynamic on Transit Connect EVs and had owned real EVs. He knows better than this.

  24. Any argument can be taken to the extreme but people move to states with custom cars purchased from wherever, new and old.
    Mainly what I have read in most states is that a dealership must, yada, yada. I see nothing that says residents can only purchase a car within their home state.
    I agree. Tesla stores are galleries not dealers. The car is delivered to your door step not the store. There are no giant car lots to wade thru.

  25. @Jim: You're right: Anyone can purchase a new car in any state.

    To transfer the registration to your home state, however, generally requires 7,500 miles on it before the 2nd state deems it a "used car". State laws vary, of course, and I'm sure there are state combinations in which you could buy a car online, register it there, then turn right around and register it in another.

    But the point remains: In many states, dealer associations have successfully lobbied for laws that make it illegal for a carmaker to sell a car directly to an end user. That's a challenge Tesla can't get around if it hopes to scale up to tens and then hundreds of thousands of deliveries a year.

  26. Sounds like much ado about nothing. The lawsuit sounds frivolous since Tesla isn't actually planning on selling any vehicles in the mall store, it's just about offering a "Tesla experience". The ordering is online so these stores don't qualify as a dealerships so they don't need to meet legal requirements.

    The more serious problem could to be the online ordering thing cutting out a dealership. If that results in registration problems Tesla might have to find a car dealer in those states willing to accept a few hundred bucks per unit to put their name on a registration form. I wonder if they will be able to find takers for a couple of thousand easy bucks a month ....

  27. Perhaps the fear is the auto dealership going the way of the record store and the book store (oops some of them are still around).

  28. One can only hope. I know of few places I like less than car dealerships.

  29. The government should not have the right to prevent someone from starting a business. This is nothing but mercantilism, socialism, whatever you want to call it. It's not freedom/capitalism.

  30. Read about this locally, don't check here as often as I should.
    Anyway, I'm a Model S reservation holder and live 5 minutes from the Natick Mall. I hope this gets resolved.

    In the Tesla drivers forum elsewhere there is talk they will be building a service center nearby too.

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