Tesla Fights Back In Georgia: Do Traditional Dealerships Stand A Chance?

September 3, 2014

Elon Musk didn't take the easy route when he launched Tesla Motors. 

It's not just that he wanted to create game-changing electric cars that could compete with their gas-powered cousins (though he did). It's not just that he eschewed traditional advertising (which he did, although fans have picked up the slack). And it's not just that he's been generous with his potentially lucrative patents (though he definitely has).

No, Musk and Tesla's biggest hurdle in the U.S. has been bypassing conventional dealerships, selling directly to consumers -- something that's illegal in most states thanks to a nationwide patchwork of decades-old franchise laws.

Tesla's latest high-profile battle is taking place in Georgia, where dealers allege that the start-up car company is in violation of the state's franchise laws. Not surprisingly, Auto News reports that Tesla is now fighting back.


To operate in Georgia, Tesla had to agree to sell fewer than 150 vehicles directly to consumers in the state. Last week, the Georgia Automobile Dealers Association complained to the Georgia Department of Revenue that Tesla had, in fact, sold 173 vehicles between October 2013 and June 2014. (GADA also alleges that Tesla has been selling stock, rather than customized models to customers, which also seems to violate the conditions of Tesla's business license.)

Tesla hasn't publicly commented on how many vehicles it has sold at its one Georgia outlet, located in Marietta, just outside Atlanta, nor has it commented on its record of customization there. However, yesterday the company stated that its agreement regarding sales figures is measured by the calendar year.

That suggests there may be some truth in GADA's claim that Tesla has sold more than 150 vehicles over the past ten months. If sales were divided into 2013 and 2014 figures, though, Tesla could very well be operating within the law. Tesla has declined to offer specifics on its sales volume in Georgia.


If the situation were different, conventional dealers might have a chance against Tesla. But as we've seen time and again (in the comments on this post for example), dealers have jerked around a lot of people over the years. Today, car salespeople are seen as some of the least trustworthy in the country. To many, the franchise laws that were originally put in place to guard dealers from automakers may have outlived their usefulness: they're no longer protective, they're protectionist. 

Add that to the beautiful electric cars that Musk and his team have created, as well as Tesla's beloved underdog status, and you can see: public sentiment is clearly not in favor of dealers.    

That's not to say that Tesla will win in Georgia in the short term. But lawmakers and regulators probably see the writing on the wall. In the long term, most of us would be surprised if Tesla didn't come out ahead. 


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