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.