This Can’t End Well: NADA Wants Meeting With Tesla

4 years ago by Jay Cole 17

Bill Underriner, Chairman of the NADA and Its 16,000 Dealerships, Brings the Pain to Tesla

When the  National Automobile Dealers Association, says it wants to have a meeting with you, and you are currently being sued over your dealership (or lack thereof) practices, it’s probably not a good thing.

And sure enough, in a statement today the NADA said:

“NADA has serious concerns about Tesla’s intentions. We are seeking a meeting with Tesla executives, including its CEO Elon Musk, to discuss these concerns.

If we were Tesla, we would leave the answering machine on at the office.

Somewhere Today, Elon Musk Made This Face

As recently reported, Tesla won the right to open a boutique store in the Natick mall in Massachusetts, despite legal protests from that state’s Automobile Dealers Association, provided it did not actually sell the Model S at that location.

However, no sooner had Tesla claimed victory but two more claims popped up protesting the company-owned, non-dealership, demonstration outlets.  This time, buoyed by recently success, Tesla (through its CEO Elon Musk) went on the offensive, issuing a a public statement, saying:

“Regrettably, two lawsuits have nonetheless been filed against Tesla that we believe are starkly contrary to the spirit and the letter of the law….they will have considerable difficulty explaining to the court why Tesla opening a store in Boston is somehow contrary to the best interests of fair commerce or the public.”

It now appears state dealer associations have appealed to the mothership (NADA) and its much deeper pockets to take up the fight.

In response, William Underriner, chairman of the NADA, although saying the organization would not join in the legal action at this time, still offered some ominous words to journalists on Tuesday about taking up the fight against Tesla:

“(Litigation against Tesla) is on a state-by state-basis.  We will help them, yes, thats for sure.  We got a whole mess of lawyers in Washington that work on state franchise laws.  Directly no (we won’t get involved), but indirectly yes.”

In a interview with the Automotive New,   Robert O’Koniewski, executive vice president of the Massachusetts association that recently lost a landmark fight against Tesla in Natick, said “They claim they’re operating under the guise of a non-sales showroom, and we call that out as an outright scam.”

The issue here at stake for Tesla is not so much its legal footing considering its recent victory, but the considerable pressure the NADA can apply both to the company publicly, but also in costs to defend itself in court.  And spare cash is one thing Tesla is currently very short on.

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17 responses to "This Can’t End Well: NADA Wants Meeting With Tesla"

  1. I suspect Tesla has carefully thought this all through and has a plan on how they are going fight the NADA. They HAD to know this was coming and if they didn’t prepare for it then I’d question Tesla’s competence. They could well end up fighting for every location like they had to do in Natick, then battling multiple lawsuits in every state, etc. Even if they win the majority of them, the legal fees would be staggering and cost in the tens of millions of dollars. I do hope they have a well conceived defense.

  2. Roy_H says:

    I agree, Tesla must have already budgeted for these lawsuits. I don’t agree with the test of millions in lawyer and court fees, it just doesn’t have to be anywhere near that expensive.

    This whole think is so stupid. These laws were enacted for a different era almost 100 years ago and not longer have any merit. Win or loose, Tesla will come out a winner because of all the ill will generated by NADA will make customers even more unwilling to buy cars from dealerships (but of course they will because there is no real alternative). Nothing like having customers come into your dealership prepared for a bad experience.

    Tesla may end up being restricted to various States, and customers will have to go out of state to buy or test drive the Model S or X. Having to do this will create resentment towards NADA not Tesla.

    1. Roy_H says:

      Argg! no edit. “tens of millions” and “This whole thing”

      1. Roy, it can definitely cost that much. If the NADA starts contesting every Tesla store’s planning or zoning board application, then initiates lawsuits in every state it will certainly be that much. I am a partner in some commercial properties and one of my partners has been involved in a lawsuit over another property he owns and their legal fees are over $400,000 so far as it’s dragged on for a year, they have had to fly in experts to testify, etc. The NADA will spend whatever it takes to keep Tesla from breaking their grip on how they control how cars are sold in the US.

        Yes, these laws are antiquated and need to be rewritten or just trashed. However I’m not sure your statement is correct: “Tesla may end up being restricted to various States, and customers will have to go out of state to buy or test drive the Model S or X. Having to do this will create resentment towards NADA not Tesla.”
        The question is whether or not your state will let you register the car. You can’t just go to the next or buy a car online if you can’t register it. I think the NADA is lobbying to have the States deny registration if Tesla doesn’t comply with the dealership laws there. That could be a big problem.

  3. DrInnovaiton says:

    Tesla would be hard pressed to buy this amount of attention — even if it does cost them millions. When consumers hear the NADA is saying they will more respect/interest in Tesla as a car company doing something different and right. This will further underscore them as the underdog fighting a broken system. It would be more fun if they court cases could overturn the broken law that is being applied. I would much rather have ordered my Volt via the internet or on the phone, and cut out the middle man that adds no value. Oh wait.. I did buy my volt, sight unseen, from another state — I just had to pay the dealer for the privilege of allowing me to pick it up there.

    1. Roy_H says:

      +1 !!

    2. Bonaire says:

      Consumers have to realize that the “free market” is far from free.

  4. Roy_H says:

    Meet with NADA? I don’t think so. What could possibly be accomplished? Do they really believe that they can talk Tesla into selling through franchised dealerships? The only purpose of the meeting would be to try to apply pressure on Tesla to capitulate. A complete waste of Tesla’s time and money.

  5. Nelson says:

    This smells like another method being utilized by the oil industry to try and stamp out the EV revolution. Another monkey wrench trying to slow down the inevitable. Its makes no sense that the NADA would be so inflamed about a one car automobile manufacturer. If Tesla had a lineup of 5 or more electric vehicle models then I “might” consider listening to the NADA arguments. They’re trying to stifle competition to maintain their monopolistic association.

    NPNS!
    Volt#671

  6. Bonaire says:

    I don’t think consumers support NADA. Only Dealerships and NADA.

    “The first rule of a system is to protect the system.”

    I hope some day, dealerships can support themselves on their value and not through legal ramifications. I’d gladly go to Michigan and buy cars from the factory. If the “laws” would allow for it.

    Dealerships should do what they make the most money from – service. Maintaining a lot of 1000 cars for local consumer convenience is still a good idea but should not be their monopoly. As a consumer I say “I hope NADA can become progressive and stop it’s early 1900’s protectionist practices”.

  7. vdiv says:

    Maybe it is time for the consumers to sue NADA for violation of the Sherman act, for coercion and blackmail.

  8. MrEnergyCzar says:

    The dealers should be focusing on improving their own dealers…. This is great free press and can only help Tesla….it also makes NADA look envious and outdated or behind the times….
    It’s funny that at my local mall they have GM cars and information on display. Maybe Tesla should sue for that if it’s deemed illegal…
    MrEnergyCzar

  9. Bill Howland says:

    Looks like I’m in the minority viewpoint here. Fellow start-up Fisker sells through established dealers. As I’ve stated for two years now, Tesla is in the enviable position of ONLY dealing in New Cars, and selling each of them for FULL LIST PRICE, then they don’t have to have any brick and mortar service nor deal with the complication of trade-ins. Its pretty obvious that the wind is blowing the other way. I’d be very surprised if this model lasts out another year.

  10. Nelson says:

    OT,
    I love this website because it’s very inclusive but a company I read about in 2006 seems to have escaped your radar.
    Phoenix Motorcars
    401 S. Doubleday Avenue
    Ontario, CA 91761
    http://www.phoenixmotorcars.com/index.php

    They’re probably not big but the sum of all the small companies promoting EV’s is what makes you site exciting.
    Are they still in business?
    Have they sold many EV’s?
    What battery do they use?

    NPNS!
    Volt#671

    1. Jay Cole says:

      Hey Nelson,

      I am somewhat familar with Phoenix Motorcars, but I confess to not following them hardly at all of late. Quite frankly nothing every happens with them, and they don’t seem to go away. As you say, they were one of the first on the scene. Pre LEAF, Volt, Tesla, etc.

      Here is what I recall/impression of their story (while admittedly doing no research whatesover, lol):

      “Back in the day” (mid to late 2000s) Phoenix made a lot of fantastical claims about products and offerings, but by 2007ish, it was a shell of itself and nearly worthless.

      Surprisingly they started saying about this time that they were going to start rolling out test fleets of EVs, and I think they hooked up with an island community of some sort for a exchange program for late 2008/early 2009.

      Then there was nada out of them for what seemed like forever…that is until they went bankrupt right around 2009ish.

      Ironic to the name, it resurfaced out of nowhere again in 2010 thanks to some foreign investment (that I can’t recall atm), and once again, fantastical claims were made.

      I believe at this time was the start of really promoting the SUT (like a SUV but a truck), and they said it was going to be out really quick, like in months/end of 2010. I also believe they said something about a 100 mile version to follow in 2011.

      AFAIK, nothing ever happened, and to this day they still threaten to deliver vehicles (while taking reservations)…I think the trucks were/are supplied by Ssangyong (Action sports truck or something) and they had/have a whole whack of them hanging around their offices for conversion (at some point) with Altair/Electrovaya batteries.

      Unofficially, I guess they are on /ignore by the site until they prove they can produce…or there is a development of some kind.

      1. Nelson says:

        Thanks, for the info.

        NPNS!
        Volt#671

  11. BlindGuy says:

    Since Tesla is not actually selling cars at these facilities, I don’t see what the problem is. However, IMO I believe Mr. Musk may have said at some point that he might want to sell Tesla and move on to other products. With that in mind and the dealings Tesla has with Toyota, why not have a few select Toyota Dealers also sell and service Tesla products? Who knows, maybe Toyota will be the ones to eventually buy Tesla anyway. I’m just thinking out loud.