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Tesla Wins One In Minnesota: Bill To Ban Its Stores Defeated

 
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Tesla Model S with DISRUPT license plate, March 2013 [photo: Sam Villella]

Tesla Model S with DISRUPT license plate, March 2013 [photo: Sam Villella]

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Like a lot of news from Tesla, this came in the form of a tweet by CEO Elon Musk on Friday morning.

It read, in its entirety, "Minnesota auto dealers tried to pass legislation to block Tesla stores. Bill was just defeated in Senate. Thanks MN!"

And indeed, a Minnesota Senate committee voted down the bill.

Score one for Tesla Motors [NSDQ:TSLA], at least for the moment.

But the fight isn't over yet. On Wednesday, the state Assembly is holding a hearing on its own version of the bill.

Both Minnesota dealership owners and Tesla representatives will testify.

Most state laws prohibit carmakers from opening dealerships that compete with franchised dealers selling the same cars, because the company might give its own dealers better financial terms than the franchisees.

But auto dealers find Tesla's model of selling exclusively online through factory-owned Tesla Stores highly threatening to the lock they have on all auto purchases.

Tesla, of course, has no franchised dealers--so the company says it is complying with all state laws governing car sales.

Nevertheless, the Minnesota Automobile Dealers Association followed the model laid down three years ago in Colorado and worked to persuade the legislature to amend the state's franchising laws last month.

That amendment would ban auto companies from owning any dealerships at all, under any circumstances.

Auto dealers across the country, and their national group--the National Automobile Dealers Assocation, or NADA--view the Tesla model as a continuing threat to their livelihood.

Indeed, its chairman William Underriner told reporters last October that NADA "has 'a whole mess of lawyers in Washington' who work on state franchise laws," which presumably NADA could deploy in every state where Tesla has or seeks to open a store or service facility.

CEO Elon Musk spoke out that month about various pending legislation pushed by dealers that targets Tesla Stores.

So, there'll be more to this story. We'll keep you posted.

[photo courtesy of Sam Villella]

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Comments (3)
  1. Car dealers and lawyers, a slithery combination if every I have heard of one.
     
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    +9
    Bad stuff?

  2. Guess the license plate in the picture says it all: Tesla is a pretty disruptive newcomer to the carmarket. One that is increasingly resented no doubt by the old regime since it refuses to do what all analysts had predicted it would do and die already. So it needs a hand and what better way than try and pull the successful Tesla Store formula rug from under its feet? Luckily without success so far but this will only get uglier since it may not just be dealers that are behind these lawsuits and legislation attempts. They don't have that much to gain from it anyway as reflected by the "no standing" rulings. The dealer organisations may just be acting on behalf of more powerful interests like rival carmakers and more worryingly: oil interests.
     
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    +3
    Bad stuff?

  3. I generally understand the belief that it would be patently unfair to have a non-OEM owned dealer competing with an OEM-owned one. In that sense, I could conceivably understand the basic objections to the Tesla model.

    But... If the Tesla "dealers" are not competing with other, non-Tesla owned competitors, I just don't see the problem. If the problem is an OEM having an unfair advantage due to owning the dealership, again, that could be a problem. IF there were franchisees competing at a disadvantage.

    Here, however, it's not that Tesla is being unfair, it's that the dealership lobby wants to artifically insert itself where dealers just aren't necessary. That's my viewppint, anyway...
     
    Post Reply
    +1
    Bad stuff?

 

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