VA may deny Tesla a store license; dealers say they want to sell Teslas


Tesla Store Los Angeles [photo: Misha Bruk / MBH Architects]

Tesla Store Los Angeles [photo: Misha Bruk / MBH Architects]

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Tesla Motors recently had another setback in its fight with Virginia's franchised car dealers over direct sales of its luxury electric cars.

Over the past several months, Tesla has battled dealers and their lobbyists in the state over plans to open a second company-owned store.

Now, the Virginia Department of Motor Vehicles is recommending against approval of Tesla's proposal to open that store.

DON'T MISS: Virginia dealers double down on Tesla attack, demand probe of sales

That recommendation was made by Daniel Small, who was appointed by the DMV to oversee the months-long series of hearings related to Tesla's plans for another store, according to Richmond BizSense.

The new store would have been located in or around the capital city of Richmond.

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

Tesla Store opening in Westfield Mall, London, Oct 2013

Tesla Store opening in Westfield Mall, London, Oct 2013

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The Silicon Valley carmaker had apparently been confident that the DMV would approve its plans, as it had leased a 30,000-square-foot building for the store in April.

In July, it received approval from the Henrico County Board of of Supervisors to rezone the building—formerly a furniture store—for car sales.

But Tesla has faced continued stiff opposition from the Virginia Automobile Dealers Association (VADA).

ALSO SEE: Tesla takes dealership fight in Utah to state supreme court

In March, the VADA filed a lawsuit alleging that both Tesla and the Virginia DMV engaged in a "conspiracy" to hide the opening of the store.

The suit alleged that a hearing to evaluate Tesla's request for a second location was set up hastily, in a manner meant to limit any opposition.

The VADA followed its lawsuit with a May letter to the Virginia Motor Vehicle Board that demanded an investigation into Tesla's sales practices.

Tesla Store opening in Westfield Mall, London, Oct 2013

Tesla Store opening in Westfield Mall, London, Oct 2013

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Now the dealer group appears to have changed its strategy somewhat.

As well as arguing that Tesla's company-owned stores are illegal, the VADA now seems to be arguing that they are unnecessary.

At least 11 existing car dealers have said they are willing to sell Tesla electric cars, according to the DMV recommendation against opening the new store.

MORE: Tesla opens new electric-car store in San Francisco, to serve as flagship

The apparent willingness of franchised dealers to sell Tesla vehicles was one reason why Tesla's proposal was denied.

Since it started selling cars in 2008, Tesla has consistently maintained that it needs to operate its own stores.

CEO Elon Musk has said repeatedly that franchised dealers can't be relied on to promote electric cars adequately, which may require a lengthy education process and multiple visits by potential buyers.

Tesla Store, Palo Alto

Tesla Store, Palo Alto

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So it seems highly unlikely the carmaker will take any of the 11 Virginia dealers up on their offers to add Tesla to existing multi-brand dealerships.

Virginia DMV Commissioner Richard Holcomb must make a final decision on the license for the new Tesla Store within 60 days.

If that decision does not go its way, Tesla may appeal, as it did in 2013—which resulted in eventual approval for its existing Virginia store.

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