Tesla Motors Inc (NASDAQ:TSLA) has been allowed to apply for a dealership license in Virginia after holding discussions with the Virginia Department of Motor Vehicles (DMV), and the Virginia Automobile Dealers Association. Prior to this, Tesla was denied permission to operate a dealership in Virginia by the DMV, but now authorities have lifted the restrictions by bringing in some concessions and compromises.
Tesla’s next step will be to obtain a license from the Virginia Motor Vehicles Dealer Board, which is the state auto dealer regulatory agency.
A major victory for Tesla
Elon Musk’s Tesla has thus achieved a major victory in a highly regulated market that only allows cars to be sold through an authorized dealer. In this case, it is nothing short of surprising that the Virginia Automobile Dealers association has given Tesla a go ahead. Car dealers have been against the idea of owned showrooms ever since Tesla initiated this mode of sales. According to car dealers, this model will affect their business and give Tesla an undue edge over all others.
Opening a retail store in Virginia will be a huge plus for Tesla Motors Inc (NASDAQ:TSLA). This store will benefit the car maker as it will be near the country’s capital, where potential customers reside. Tesla Motors is a manufacturer of high end vehicles which are designed and manufactured for a premium class of customers, and thus having a retail store near Washington, D.C., will be a perfect place for Tesla.
Elon Musk, the chairman and CEO of Tesla Motors, has been advocating a different sales model for cars for a while now. He believes that this sales model is apt for electric cars as the dealers are not interested in selling such vehicles, which require more effort to explain the benefits to customers. Musk has, therefore, adopted a model of ownership stores where people who understand the electric vehicle are employed so that they can impart information to customers.
Tesla Motors Inc (NASDAQ:TSLA) took an innovative and different path to sell the cars through owned stores, a practice that is prohibited in 40 states. However, there are a few states, New York, Florida, and Massachusetts, among them, which will allow Tesla to sell directly.