Tesla’s Direct-Sales Push Raises Auto Dealers’ Hackles
By Alan Ohnsman and Mark Niquette Mar 10, 2014 4:25 PM ET
To hear Ohio car dealers tell it, the sleek Tesla Motors Inc. (TSLA) showroom that opened last year in a Columbus mall is a threat to a bedrock U.S. institution.
These businesses are pressing lawsuits that would stop Tesla’s showroom and a second in Cincinnati from letting people order customized Model S electric cars right from the factory. They argue that Tesla’s direct sales violate state automotive franchise rules. After failing in a previous attempt last year, the group also backs legislation pending in a Senate committee to force Tesla to use franchise dealers if it wants to open more sales points in the Buckeye State.
Car-sellers in states including New York, Minnesota and Georgia have also sought in the past year to block Tesla from directly retailing its models. Texas dealers successfully backed a law setting the nation’s toughest restrictions on Tesla, and Virginia and Arizona also imposed limits on its retail activities.
Dealers fear Tesla’s model would set a precedent that could let other automakers sidestep the way independent franchisees have sold and serviced vehicles for eight decades. If Tesla succeeds in bypassing middlemen, some argue then future startups or entrants from China or elsewhere could sell directly or even create online retail outlets that sidestep dealers entirely.
’Mickey Mouse Thing’
“I don’t want ‘Hydrogen Motors’ to come along five years from now or some other Mickey Mouse thing to come along and then just jack up the industry,” said Rhett Ricart, president of Ricart Automotive in suburban Columbus and a plaintiff in a lawsuit filed against Tesla in Ohio. “It’s not right.”
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http://www.bloomberg.com/news/2014-03-10/tesla-s-direct-sales-push-raises-auto-dealers-hackles.html
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