Monday, January 7, 2013

Tesla receives respite as judge dismisses dealers' lawsuit

Association contemplating seeking appeal

Electric carmaker Tesla has received some respite as a county judge turned down a dealer association's plea to stop the automaker from selling cars directly from a showroom in Massachusetts (US), reports Automotive News. In a ruling, Norfolk County Superior Court Judge Kenneth Fishman said the Massachusetts State Automobile Dealers Association and other plaintiffs lacked standing to sue. Incidentally, it is the same ground on which a previous injunction was denied in November against the company operating a Boston store. The association has expressed dissatisfaction on the decision but has not stated whether it would seek an appeal, for which it has a 30-day time limit.

Significance: In most US states, car dealers have successfully lobbied for laws that prevent OEMs from opening company-owned dealerships. This law rests on the reasoning that company-owned dealerships skew the level playing field and could compete unfairly with independent dealers. Tesla, on the other hand, has no franchised dealers of traditional business nature so far and claims that pursuing the established practice of independent dealers selling electric cars is unlikely to boost sales of new technology vehicles, which count high prices and limited electric range among some of the drawbacks compared to traditional gasoline cars. While Tesla is unlikely to present a serious challenge to the traditional franchise model, dealers are wary that allowing Tesla to operate company-owned showrooms could set a precedent.


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