Tesla Motors continues to battle Virginia car dealers over the opening of a second company-owned retail store in the Old Dominion State.

In March, the Virginia Automobile Dealers Association (VADA) filed a lawsuit against both Tesla and the Virginia Department of Motor Vehicles, alleging a conspiracy to "hide" the opening of a second Tesla Store.

Apparently not satisfied with that action, dealers are now calling for an investigation by state regulators into Tesla's sales practices.

READ MORE: VA auto dealers sue Tesla, DMV over hearing to 'hide' proposed store

A 10-page letter accusing Tesla of violating state laws was submitted on May 31 to the Virginia Motor Vehicle Board, which regulates Virginia car dealers, according to Automotive News (subscription required).

In the letter, the VADA accuses Tesla of running an unlicensed sales operation, processing fee violations, improper advertising, and failing to disclose online-systems filing fees, taxes, and government fees.

Tesla currently has one licensed retail store in Virginia, in the affluent neighborhood of Tysons Corners, close to the District of Columbia.

2016 Tesla Model S

2016 Tesla Model S

A second Tesla Store in a nearby shopping mall is also open, but has not been licensed by the state to sell cars.

Tesla submitted a bid for a second sales license, which triggered the VADA lawsuit filed in March.

In the suit, the dealer association alleged that the Virginia DMV and Tesla violated the terms of a 2013 agreement that prevents Tesla from opening a second store until 2017.

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The suit alleges that a hearing to evaluate Tesla's request for a second location was set up hastily, and without the VADA's knowledge.

The dealer association believes Tesla and the DMV colluded to get the new store approved quietly to limit opposition.

Virginia is one of many states where franchised dealers view Tesla's direct-sales model as a threat to their business, and use existing franchise laws to fight it.

2016 Tesla Model X

2016 Tesla Model X

These laws were generally created to prevent carmakers from opening company-owned stores that compete directly with those of their franchises.

But Tesla has no franchised dealers to protect.

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Nonetheless, the opening of Tesla Stores has led to the tightening of franchise laws in many states, resulting in bans on any direct sales by a carmaker, period.

Consumers in states where these bans have been instituted must purchase their cars in states where direct sales are legal, and bring them back to be registered.


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