Tesla Motors has had to fight against the Automobile Dealer Associations (ADAs) in multiple states, solely because Tesla Motors sells direct to the client, instead of using a dealership network.
The direct-sales model has been working well for Tesla Motors, which allows potential clients to view the vehicle in a zero-pressure environment, as opposed to the typical automobile dealership environment. The Tesla Store also allows Tesla Motors to set fair pricing and eliminate the need for salespeople. At the same time, the direct-sales model has been raising concerns amongst the ADAs in various states, most of which have laws preventing automakers from selling direct to the client.
Typically, these laws protect the dealerships from unfair competition. Toyota Motor Company could easily set lower prices, forcing the dealerships out of business, but the interesting thing is that Tesla Motors does not have any dealerships, so there is no competition. Still, the ADAs don’t like it, and have fought Tesla Motors’ right to sell direct in a number of states, including Virginia, Minnesota, and Massachusetts, where Tesla Motors kept the right to sell direct. On the other hand, Tesla Motors is still having trouble in Texas and New York, as well as Ohio.
Recently, the Ohio ADAs attempted to tag an amendment, which would have defectively shut Tesla Motors out of Ohio, to a completely unrelated bill. The amendment was slashed from the bill, a failure for the ADAs, and Tesla Motors went on to open a Tesla Store and a Service Center in Columbus. Tesla Motors plans to open a second store in Cincinnati, but not before they have to deal with more “bullying” by the Ohio ADAs. The ADAs, including the Midwestern and Ricart Auto Groups, are suing Tesla Motors, the Ohio Department of Public Safety, and the Ohio Bureau of Motor Vehicles, to have the Tesla Store’s license revoked.
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