Tesla Starts 2017 Back In Court Over Direct Sales

Front view of Tesla Model S (Photo Getty Images)
Front view of Tesla Model S (Photo Getty Images) /

Tesla has been running against entrenched car design positions since its inception. Its sales method has turned out to be the most contentious.

With the popularity of Tesla surging across the country, you would think the path for successful sales would be clear. That is hardly the case. Arcane laws that prevent direct sales from car makers are still hampering the companies growth.

These laws were put in place to protect local dealers from being forced out of the market in a different time. Since then, dealerships have transitioned from making most of their profits on sales, to the service and repair departments. Tesla’s business model is customer centric and wants to be there directly for its consumer for both sales and service.

With the advanced technology involved in cars like the Tesla, direct consumer sales and maintenance is the foundation of satisfied customers. Anyone who has had to fight with a dealer over warranty repair knows how frustrating it is. Tesla sees a future where its owners do not have to fight the middle man.

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In Missouri, a recent court decision stopped all car sales for Telsa in their own dealerships on December 31, 2016. While preparing to appeal, the only option is for consumers to order a Tesla is on line or to go out of state. The laws in place are truly protectionist in nature and do nothing to help the end consumer. They were written and are being litigated by the National Association of Auto Dealers. Not exactly a group looking out for us car buyers.

What the decision of the judge in Missouri has really done is open a path for Tesla to move the case of its direct sales model into federal court. The commerce clause of the constitution was put in place to make for fair trade between states and avoid situations just as this. Since Tesla does not build the cars in Missouri, they have to cross the border to be shipped in. That action makes them subject commerce clause and any restriction of sale subject to federal law.

Another plus here to the judges ruling is it is in direct conflict with other laws around the country. To get a case such as this moved to federal court, there needed to be decisions that are conflicting. The federal judiciaries place to settle interstate commerce disputes. It would be in the court’s best interest to ensure fair trade between all states, and all direct sales by all companies.

Here in 2017 it is hard to believe innovative companies like Tesla are still having to fight this battle. It is like when Preston Tucker tried bringing his car to market after World War II. The battle for change is harder than the one to build. As history that is shown us, those he stand in the way of progress normally get run over. Hopefully, in near future, the dealers associations will get on the train before they get run over by it.

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