Tesla Motors Inc Referral Program Now Opposed By CA Dealers

Customers and analysts appreciated Tesla Motors’ $1,000 referral program announced a few weeks ago for being the first modern incentive introduced by the electric car maker. However, this program is seen as a competitive move by at least two of the state dealer bodies.

Tesla Motors Inc Referral Program Now Opposed By CA Dealers

CA dealers using 1968 law

Under the referral program, the new buyer gets a discount of $1,000 on the purchase of a Tesla car, and the referrer also gets a credit of $1,000 for service or a future purchase of a Tesla vehicle. In Virginia, regulators blocked the program, terming it “bird dogging.” Bird dogging refers to a practice under which a financial reward is granted to people who do not have a license for selling vehicles but have helped in its sale. Since Virginia is an important market, Tesla altered the program with the full $2,000 going to the buyer.

Now California seems to have the same problem with the program. California’s New Car Dealers Association is asking for a ban on the referral program, citing a state law prohibiting this practice. According to a report in Automotive News, the association sent a letter to the state Department of Motor Vehicles, requesting that they crack down on Tesla’s referral program.

The law being cited by the dealers is the 1968 California Motor Vehicle Sales and Finance Act, which says: “It shall be unlawful for any person to act as a vehicle salesperson without having first procured a license or temporary permit.”

Tesla may again tweak its program to meet CA laws

Similar to the Virginia case, Tesla is saying that the state franchise laws should not be applied to the incentive program. The California dealers sent the letter on Aug. 26, and decisions regarding the proceeding with the case rest on the director of the DMV.

The program might be tweaked in California as well, but it is not necessary for Tesla owners to stop referring potential buyers if they do not benefit from the program. The referral program from Tesla is not going to harm any actual consumers or dealers as the company does not have an independent dealer network, but still it would need to tweak its program in other states as well if the legal hurdles don’t get cleared.

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  • May Grindle

    The dealer you’re parked outside will soon submit a “secret agent” to you, working for them, who will drive your car like crazy and scare you. You will soon refrain from giving out free test drives. Great idea though :)

  • TeslaOwnerCampaign

    So, this is how the dealer cartels need to be approached: If they strong-arm Tesla into changing the policy in California using a law they know full well has nothing to do with what Tesla is offering, they’re attacking not only Tesla, but us owners as well. In response, I’ll park my Tesla in front of a luxury car dealership on Saturday afternoons and offer free test rides. I for one don’t need the $1k incentive. I love to tell people about my car. And if the dealers complain, I’ll tell them to thank their association. The cartels better be cognizant of the fact that it is a short distance from being an ardent supporter to becoming an activist. I’m sure I can get a few other fellow owners to participate.

  • Joe

    I’m sure some lawyer out there can find case law that undermines the entire basis of the case “unlicensed salesman”. Tesla has already limited it to 10 vehicles. CA may just require that be reduced to only 1 vehicle per year to be legal. Besides, why would CA care, that money still gets taxed as state income tax (which is higher than the $160 license fee anyway). States have case law and statutory law that determines how many car sales declares a person an “unlicensed salesman”. Similar cases have been decided on cigarette sales across state lines. Under 10 cartons is allowed, over 10 cartons you must have a license to transport/sell cigarettes. Case dismissed, dealers then copy cat the incentive plan as hypocrites.

  • BorgWorshipper

    Except CA is Tesla’s home base, and has massive customer and political support. I doubt Tesla would cave like they did in VA.