Dealers Associations Call Tesla’s Factory Stores Illegal image

After Elon Musk opened several Tesla factory stores, his plans to open more might face a roadblock.

Currently, Tesla has 17 stores in 10 states and the District of Columbia, most of them located in shopping malls, and it plans to open 6 more this fall. But now dealer associations from several states and state regulators say that the automaker’s stores violate state franchise laws which don’t allow factory ownership of dealerships.

According to the protesting dealer associations, these factory-owned stores are unfair competition for rival dealerships, cannot offer support for customers that need repairs and will soon threaten the franchise system if left unchallenged.

“If a manufacturer sees that Tesla is successful with this kind of business model, who’s to say they don’t break out their own EV product lines and create a separate system that bypasses dealers?” said Bob O’Koniewski, executive vice president of the Massachusetts State Automobile Dealers Association. “It’s extremely problematic.”

George Blankenship, Tesla’s vice president of sales said that the automaker will comply with the states’ laws and that if they can’t be a dealer in a mall, no one will stop them to tell people access their website and do reservations on-line.

  • Jack Burgess

    These laws are antiquated, protectionist, and now only serve as an arbitrary barrier to protect a special interest group — the automobile dealers. Created prior to cell phones, ATM's, microwaves, PC's, the Internet, and especially Internet commerce; the laws no longer make sense in today's modern markets. They were originally enacted to foster competition. But over time as our modes of commerce have been updated, these laws have come to do just the opposite. If we allow them to stay in place, they will continue to stifle true competition, thus harming market efficiencies and the productivity of the automobile industry as a whole. Today, we consumers end up paying a little bit more for our cars due to this now unwarranted and inefficient protectionism. These laws should have been changed years ago.