Virginia Auto Dealers Can Sue Tesla Over Second Store

3 months ago by Sebastian Blanco 26

The fight continues.

Tesla’s legal challenges in Virginia have been long and complicated. In 2013, the company made a deal with the Virginia Department of Motor Vehicles and the Virginia Automobile Dealers Association (ADA) to open up one store in the state. This was in addition to a service center in Northern Virginia. Everything seemed peaceful (sort of) until Tesla said it wanted to open up a second store. That move is causing problems.

Last November, Tesla got permission from the state Department of Motor Vehicles to open a second store. The judge in that case said, “After careful review of the entire record, I find that there is no dealer independent of Tesla in the community or trade area of Richmond, Virginia, to own and operate a Tesla franchise in a manner consistent with the public interest.” The Washington Post reports that it is legal for an automaker to sell its cars directly to the public if there is no dealer “available.” Tesla argues that since its electric vehicles are sold at a specified price, don’t need oil changes or other regular maintenance that ICE vehicles do, and since they take longer to sell, they’re just not a good fit for traditional dealers. “A dealer who cannot stay in business is not ‘available’ in any real-world sense,” Tesla lawyers wrote in a filing.

Dealers disagree, unsurprisingly, and want to put legal roadblocks up against Tesla’s expansion in the state.  The AP reports that the Virginia ADA has now gotten permission from a Richmond Circuit Court judge to take Tesla to court over the proposed second dealership. Tesla wants to open a store in Henrico County this summer, but the Virginia ADA thinks that the California automaker should use independent dealerships just like other automakers.

Tesla’s customer-to-customer referral program was also deemed to be illegal in Virginia.

Source: AP

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26 responses to "Virginia Auto Dealers Can Sue Tesla Over Second Store"

  1. jelloslug says:

    If you cannot compete, sue.

    1. Rick Danger says:

      +1. Sad.

      1. Ocean Railroader says:

        Generally if we don’t like someone with a new idea in Virginia that could flush the Good Ole Boys down the toilet we invent some rule to keep the Good Ole Boys from going down the toilet.

    2. Asak says:

      Has Tesla tried to get dealerships to sign on? I’m pretty sure some would.

      Honestly it’s hard to exactly have sympathy for Tesla here. The law says cars are supposed to be sold through dealerships and it seems like they are blatantly trying to disregard it.

      You can dislike the law, but that’s a different issue.

      1. Pushmi-Pullyu says:

        “The law says cars are supposed to be sold through dealerships and it seems like they are blatantly trying to disregard it.”

        But why are cars, and no other commercial products, required to be sold through dealerships? Should State laws require Android phones to be sold only through authorized Android dealers? If you want a box of screws, should that be purchased only from an authorized screw manufacturer dealer, instead of your local hardware store?

        Claiming that Tesla is disregarding the law, “blatantly” or otherwise, ignores the purpose of State laws protecting auto dealers. The purpose is to protect independent dealers from predatory business practices from auto manufactures that the auto makers previously used, in times of economic downturns before those State laws were passed, to make up for their income losses.

        Since Tesla Inc. has no independent dealerships, the law should not apply to Tesla in any way, shape, or form. The spirit of such laws doesn’t apply to Tesla at all. And if the letter of the law does, then that means the laws were carelessly written, or in some cases the State auto dealership associations have lobbied the State legislatures to change the wording to unfairly keep Tesla from competing in their State.

        There is no ethical or moral basis for claiming Tesla is “blatantly disregarding” the laws in Virginia or any other State in the Union. Those who believe in either a “free market” or a competitive market, should be solidly behind Tesla’s efforts to revise State laws which are erroneously, unfairly, and unethically being used to restrict Tesla’s right to compete on a level playing field.

      2. MDEV says:

        The day Tesla sign with the dealers mafia iI will sell the Tesla and buy. German car. What makes the difference for us owner besides an amazing machine is the fact of not suffering the pain to get scam by dealerships.

      3. Cecil-T says:

        The law doesn’t actually say that in any direct way. Tesla is in compliance with laws in all 50 states. Tesla’s customers don’t want to use dealerships.

        Times are changing, get over it. Change is good.

  2. DJ says:

    The whole “EVs don’t need recurring maintenance” bit is complete BS. Sure they require less maintenance than their ICE counterparts but they still need maintenance.

    Someone has to rotate the tires, chain the filters, lube things, and replace fluids occasionally. And while sure the owner can do that themselves they can also change their own oil in an ICE.

    1. wavelet says:

      ++
      Also, the drivetrain is a fairly small proportion, cost-wise, of an ICE car.
      Maintenance isn’t limited to drivetrain… Cars, EVs and non-EVs, have lots of other systems/components which need inspection and/or maintenance over the lifetime of the car: Steering, suspension, braking, safety systems, HVAC, 12V electrics, infotainment, instrumentation, interiors… Not to mention body, chassis & glass, in case of accidents.
      With the exception of brake pads, where EVs need replacement less often due to regen, there’s no difference in that regard from EVs to non-EVs.

      A lot of this only comes into play only after 5-6 years a car is on the road, which is probably why the meme that “EVs need on maintenance” is still around — there are basically no EVs >7 years on the road yet. Within 1-3 years, it’ll disappear quickly.

      EVs need service centers, whether or not these also sell the cars.

      1. Tom says:

        A service center does not need to be a dealer. It can be entirely different but just hasn’t been because frankly technology wasn’t there to do simple things like share information about the vehicle. Also 100 years ago the franchise and distributor nazis took over all manner of business verticles including alcohol.

        For instance you don’t need Tesla body shops…you can certify body shops through training and standards.

        You don’t need basic maintenance such as tires and brakes (as if brakes will ever wear out). You can certify national chains to do this.

        Electronics can be handled by remote diagnosis (for some) and a mobile service vehicle. These are often not fixes that require racks, heavy powered equipment, etc but more like computer repair guy stuff.

        Complicated issues can be handled by loaner vehicle and taking the disabled one away for a rest.

        So yes they will need service centers but there’s no need to tied that to a requirement to have a ‘dealer’. A dealer implies inventory and commissions which both drive up cost substantially without any real value to the customer.

    2. Mark.ca says:

      “Someone has to rotate the tires, chain the filters, lube things, and replace fluids occasionally.”
      YES! And that someone is any regular service center like Just Tires and such. No need for a dealer to do that. I know there are people that change their oil at the dealer for $200 but most will gladly pay $40 and change it at a regular service center.

      1. DJ says:

        I just paid $20 at my dealer for synthetic oil as well. Not sure where you’re taking yours 😀

    3. randomhuman says:

      Or you can just do it by yourself. Rotating tires and changing cooling fluids is no big deal…

  3. Anti-Lord Kelvin says:

    Cheating stable boys trying to prohibit new stores to sell auto-mobiles LOL

    1. Pushmi-Pullyu says:

      Yeah. Altho at the risk of quibbling with an excellent analogy…

      I think it’s the livery stable owners, not the lowly stable boys, who are trying to use their guild’s political influence to keep out competition from these newfangled motorcars!

  4. Ocean Railroader says:

    I think Tesla should be allowed to sell any car they want to with or with out dealers.

    I really want Tesla to open a store in that I would like to apply for a job at it.

  5. Ocean Railroader says:

    Here is Tesla’s new store location on Board Street in Richmond http://richmondbizsense.com/2017/06/21/tesla-begins-to-plug-in-on-broad-street/

    Board Street is where most of the car dealerships are at in Richmond.

    1. Jon Baker says:

      Broad Street.

  6. James says:

    Car dealers suck.

  7. Kan says:

    Just like the prairie burns down fueling next year’s growth, this dinosaur state is about ready for a doover, with its complex and antiquated redundant laws and old boys clubs.

    I saw state, sheriff, and city cops patrolling the same highway on the way to Myrtle Beach and once I got a ticket a stash of lawyer letter claiming to be able to represent me arrives in the mailbox 3 states away within 4 days.

  8. floydboy says:

    The consumer MUST be protected from him/herself. Why they could wind up purchasing a little league destroying vehicle!

    These mighty defenders of virtue are really going to have to eventually compete on the merits of their business model, as opposed to simply purchasing politicians and judges.

  9. Cid says:

    When stealerships can’t steal, they file lawsuits to make sure they can continue to steal.

    1. Mister G says:

      BINGO and they claim to support free market LOL

  10. Pushmi-Pullyu says:

    If Tesla Inc. is sued, it should immediately and aggressively counter-sue for unfair market competition.

    Too bad Tesla can’t sue State Auto Dealer Associations for violations of the Sherman Antitrust Act, but that would be a criminal charge, not a civil suit.

  11. Jason says:

    Who owns a dealership? Can anyone own a dealership? Could I own a dealership?

    Can two dealerships for the same manufacturers vehicles exist? If not, why not, sounds like un-American to me. Maybe my dealership can offer the vehicle start cheaper price.

    If anyone can own a dealership, then Tesla should become it’s own dealership, or better yet, Elon should just own the dealerships.

    Sounds fishy if only certain people can own a dealership. If the manufacturer is deciding who owns the dealership, then that also sounds fishy.

    Tesla would be doing the same thing, only they are saying they are the dealership.

    Maybe Tesla will figure out what other manufacturers already know, using dealerships takes that cost away from the manufacturer. Tesla might find in the future this is a good decision. Maybe other manufacturers will want to do what Tesla is doing, you don’t really hear anything from the manufacturers, only the dealerships.

    1. Cecil-T says:

      *Pretty much* anyone can own a dealership, but by franchise law in probably every state the owner must be independent of the parent company. Hence franchise. Franchises are very specific and quirky. And dealers must be licensed by the states on top of it all. The concept is “consumer protection”, that the nice dealer will go to bat for the consumer against the big bad manufacturer.

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