Tesla Wins Missouri 'Dealer' Lawsuit on Appeal

Missouri appeals court rules Tesla can sell its electric cars direct to consumers.

Tesla Wins Missouri 'Dealer' Lawsuit on Appeal

Posted in News

— Electric automaker Tesla will have the legal right to sell its vehicles direct to Missouri consumers thanks to a three-judge Missouri Court of Appeals panel that handed a loss to the Missouri Automobile Dealers Association (MADA).

The appeals court ruling follows a loss Tesla suffered due to the lawsuit filed by MADA against the Missouri Department of Revenue that claimed Tesla didn't deserve a license to sell vehicles in the state because the automaker doesn't sell through dealerships.

Joining the dealer group as plaintiffs are a Ford dealer based near St. Louis and a Missouri motorhome manufacturer.

In the Department of Revenue suit, the judge ruled that selling direct to consumers violates the law because Tesla is not a franchisee and can't hold dealer licenses when no dealerships exist.

Tesla's business model is the difference between night and day in the auto world, as the maker of electric vehicles has a model based on all-in-one facilities where consumers can learn about the technology and place custom orders for vehicles. There is no inventory sitting stagnant on lots and no dealer price mark-up to contend with.

A potential customer can set a time for a test drive, meet with Tesla's own employees concerning questions about the car, order the vehicle and sit back and wait for delivery.

When a recall is required, the automaker sends wireless over-the-air fixes when possible, vehicles can be repaired at Tesla repair facilities and in other cases technicians will visit customers at work or home to make repairs.

Tesla must follow all federal regulations concerning recalls, something the automaker has accomplished without need of franchised dealerships.

Tesla argues Missouri and other states that have blocked selling direct to consumers are pandering to statewide dealerships with power and influence to help politicians get elected.

The automaker also says that traditional automakers and dealers aren't concerned with the bank accounts of consumers when every consumer must buy a new vehicle from dealers that raise the price of vehicles after buying the cars from automakers.

MADA says by giving Tesla a license to sell cars without dealerships, the state could legally give anybody a license to sell new vehicles, but the opinions from the court make clear the they saw the lawsuit as a way for dealers to eliminate competition.

The panel ruled it's the responsibility of the revenue department to issue licenses, and any changes to that should come from lawmakers, not an industry group.

The appeals court ruled in favor of Tesla by finding the dealer association and the other plaintiffs lacked standing (the legal right) to file the lawsuit in the first place.

Although a victory for the automaker, the case is but one involving the right to sell directly to consumers. Connecticut, Utah and other states have blocked Tesla's business model, upsetting the automaker to the point a lawsuit was filed against the state of Michigan over the matter.