Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk has vowed to take his company’s fight for direct to consumer sales to the federal level if they can’t win at the state level. The company has already won a suit filed in New York by car dealerships claiming that it violates state franchise laws with its direct to consumer sales model.
Musk himself also went to Texas earlier this month to defend Tesla’s sales model by appearing before a subcommittee at the Texas legislature. Today Automotive News reports that if Tesla Motors Inc (NASDAQ:TSLA) continues to see “nonstop battles at the state level,” Musk said he will simply take the issue to the federal level.
Some possibilities for Tesla include lobbying or filing a federal suit claiming that interstate commerce is being restrained. Musk has said Tesla must be able to sell directly to consumers because auto dealerships are less likely to recommend electric vehicles over traditional gas autos.
Tesla could switch to a federal strategy for dealing with the fight against its direct to consumer sales model this year if it continues to face problems in each state. The National Automobile Dealers Association (NADA) says 48 states put restrictions on having dealerships that are owned by automakers’ factories. The organization also said that about 20 states have statutes which could pose a problem for Tesla Motors Inc (NASDAQ:TSLA)’s sales model.
NADA plans to “vigorously defend the franchise system.” A spokesperson told Automotive News, “A better option for Mr. Musk is to take advantage of the dealer network that already exists.”
Some dealer associations are apparently pushing for their state’s franchise laws to be amended in order to more fully block Tesla’s sales model. If that happens, Musk will take the fight federal. He also said he’ll look to the court of public opinion.
At the moment of this writing, Tesla Motors Inc (NASDAQ:TSLA) shares were up 5 percent since opening bell.
