Another brick falls as Tesla fights to practice its direct-to-consumer business model. A Massachusetts high court has thrown out a lawsuit seeking to block the electric car company from selling vehicles the Tesla way in the state. The Massachusetts State Automobile Dealers Association, along with two dealers, claimed that Tesla was in violation of a law that protects affiliated dealerships from oppressive practices from automakers.
According to the law, it is illegal for an automaker to operate "a motor vehicle dealership within the relevant market area of a motor vehicle dealer of the same line make." The Massachusetts Supreme Judicial Court ruled that the plaintiffs didn't have a standing in this case because they weren't affiliated with Tesla, and because Tesla also doesn't have any franchise dealerships in the state. Judge Margot Botsford writes that the law, "was intended and understood only to prohibit manufacturer-owned dealerships when, unlike Tesla, the manufacturer already had an affiliated dealer or dealers in Massachusetts."
Armed with that win, Tesla is taking another whack at New Jersey, which barred Tesla from selling cars directly to customers in the state. Tesla's appeal argues that the state franchise statute doesn't apply to it, as the automaker lacks any franchisor-franchisee relationship. Tesla also argues that the New Jersey Motor Vehicle Commission doesn't have the authority to enforce the statute, and that certain rules (requirements of minimum square footage, multiple display models and on-site servicing) violate the state Constitution.
Armed with the Massachusetts win, Tesla is taking another whack at New Jersey.
In New Jersey, though, the appeal may become moot, as there are currently at least two pending bills that could grant exemption to Tesla, allowing it to sell cars directly to consumers. Jim Appleton, president of the New Jersey Coalition of Automotive Retailers, says, "Something may be on the governor's desk and signed before they even decide to grant oral arguments at all."
Tesla recently won the right to practice its sales model in the state of Nevada as part of a deal to build its Gigafactory in Reno. Tesla is still barred from selling its cars in Texas, Arizona and Maryland.