Judge Dismisses Lawsuit Against Tesla Motors' Dealer Model in Massachusetts

By Jacob Brown | January 06, 2013
Tesla Motors has quickly earned its fair share of enemies since making headway with a slew of awards and a controversial dealership model. While the automaker has its share of detractors, it has steadily moved forward with business the way it wants to do it. And it seems no one can stop the electric automaker. In Massachusetts court, a judge dismissed a lawsuit saying Tesla Motors' dealership model was illegal. Norfolk County Superior Court Judge Kenneth Fishman said the Massachusetts State Automobile Dealers Association didn't have standing to sue Tesla to block its upcoming Boston store from opening.
The Dealers Association, as well as other organizations around the U.S., have tried to stop Tesla from opening up its stores. The reason? An automaker cannot own and operate its own dealerships in the U.S., as it cannot compete against independently owned ones carrying the same makes. It'd violate all sorts of antitrust laws. But Tesla doesn't have any franchised dealers. It owns the entire supply chain, and it doesn't have owners buy their cars at the stores in most cases. Tesla stores are set up like Mac stores, with experts who can help schedule test drives and instruct them how to order their cars online. Maintenance is done offsite at a nearby shop, or Tesla has its mechanics fly in to service the cars with such a sparse network right now. Tesla doesn't compete against any independent dealership for the sale of its new cars. "We disagree with his decision," Robert O'Koniewski, the MSADA's vice president, said. "If you read the statute, it's pretty clear: a factory cannot own a store, and a dealer can sue for injunctive relief if they feel the public is being harmed." Tesla opened its first Massachusetts store in Natick Mall, receiving protest from the association. In December, the automaker won approval to keep its store open and bring in a second location in Natick. Now the association has 30 days to appeal the decision. We imagine Tesla will face more of these suits as it expands its dealership network. Some may be valid, according to local and state laws. Most will continue to be sour grapes because Tesla is in a unique position to do what no other automaker can. Source: Automotive News (Subscription required)