Tesla Motors Inc (TSLA) Wins NY Suit Filed By Car Dealers

Tesla Motors Inc (NASDAQ:TSLA) has just won the right to sell its vehicles directly to consumers in New York. The company’s CEO Elon Musk went to Texas earlier this week to argue for a change in the law so that Tesla would be able to do the same there.

Tesla Motors Inc (TSLA) Wins NY Suit Filed By Car Dealers

Today Musk tweeted that a judge in New York dismissed a lawsuit filed by auto dealers in the state who claimed that the company’s direct sales model violated New York’s franchise laws.

“New York judge states: ‘…dealers cannot utilize the Franchised Dealer Act as a means to sue their competitors.’ Exactly!” he tweeted.

Musk appeared on CNBC today and said that a number of consumers don’t see visiting auto dealerships to buy a car in the traditional way “as a positive experience.” According to Musk, Tesla Motors Inc (NASDAQ:TSLA) sells cars direct to consumers because traditional dealers are less motivated to sell electric cars over their other vehicles because doing so would undermine the non-electric vehicles on the lot.

The Wall Street Journal reports that there may be some kind of “business logic” to the traditional auto dealership because selling and fixing vehicles takes up a lot of space and requires expensive buildings. By working with major auto retail chains, automakers don’t have to carry this burden themselves.

Some experts believe Tesla may even look to traditional auto dealerships later if it is successful, as it considers whether it’s still a good idea to carry those expenses itself.

At the moment of this writing, shares of Tesla Motors Inc (NASDAQ:TSLA) were up 1 percent.

About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at Mjones@valuewalk.com.