Tesla Motors Inc To Fight Direct Car Sales Ban In Missouri

Tesla Motors Inc To Fight Direct Car Sales Ban In Missouri
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Tesla Motors Inc (NASDAQ:TSLA) is disparaging the Missouri legislature’s initial moves regarding putting a ban on direct sale of cars to consumers. Missouri authorities said last week that they will not allow auto manufacturers to avoid car dealers and sell directly to buyers, according to a report from the St. Louis Post-Dispatch. The law passed in the Missouri Senate without any debate.

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Tesla demands open discussion

Attacking the lawmakers, Tesla Motors Inc (NASDAQ:TSLA) posted about the issue on its website with the title “Trouble in Missouri”, and called this move a “sneak attack” planned by the Missouri Auto Dealers as the Legislature prepares to adjourn the end of this week. In its statement, Tesla mentions that the debate should be held publicly and all sides should be given a fair chance to make their case. The company further said, “the dealers are again trying to ram through a provision under the cover of darkness and without public debate.”

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Tesla Motors Inc (NASDAQ:TSLA) argues that its direct sales model is necessary as it is different from the traditional gas-powered cars sold by dealers. According to Diarmuid O’Connell, Tesla’s vice president of corporate and business development this is an effort by special interests groups and auto dealers to create monopoly, cautioning that the outcome would be a warning to the big companies who are considering doing business in the state of Missouri.

Stiff opposition

At present, Tesla Motors Inc (NASDAQ:TSLA) owns a small facility in Missouri in St Louis and was planning an outlet in Kansas City. State Senator Mike Kehoe and R-Jefferson City, a former car dealer are ardent supporters of the ban. Kehoe questioned Missouri Revenue Department in April that why Tesla was licensed in 2013 to operate a sales operation near St. Louis even though it did not contract with any dealers.

Kehoe went on to say that Tesla Motors Inc (NASDAQ:TSLA) business model is solely designed to pass the traditional franchise model for distribution and sale of new motor vehicle. Revenue Director John Mollenkamp wrote on April 30 that it is not clear if the ruling applies to a seller like Tesla.

Earlier, representative Glen Kolkmeyer, R-Odessa supported the amendment made to create a level playing field.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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