Tesla Motors Inc Denies Georgia Dealers’ Claims


Tesla Motors Inc (NASDAQ:TSLA) has been accused by a Georgia dealership of breaching rules. Auto retailers are questioning the EV maker’s sales model, saying that it has breached the state’s licensing agreement. However, Tesla is denying the charges.

Tesla breached licensing agreement

The Georgia Automobile Dealers Association (GADA) lodged a complaint against the company with the state’s revenue department last week. The organization accused Tesla of breaching the agreement according to which it could sell less than 150 cars per year directly to customers.

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In Georgia, the Palo Alto-based electric car manufacturer has one store outside Atlanta in Marietta. In the complaint, dealers claimed that the car maker breached the licensing condition that allows it to sell only the vehicles made “in accordance with custom design specifications of the customer.” The group is demanding that Tesla’s sales license be suspended and that the automaker no longer be allowed to sell cars in the region.

On the flip side, Tesla is arguing that the sales restrictions under the licensing agreement are valid on a calendar basis. GADA, an association of 500 dealers, noted that the company has sold 173 sedans in the period from October to June.

Similar fights in other states

Tesla spokesman Simon Sproule said in an email to Bloomberg, “Tesla has been and remains in full compliance with all Georgia laws in the opening and operation of its retail operations in that state.” Sproule added that the petition is a feeble attempt to “stifle” new innovation and limit consumer choice.

The Georgia row is the latest addition to a slew of fights that Tesla has had with dealers’ associations in other states such as Missouri, New Jersey, New York, Ohio and Pennsylvania. Tesla CEO Elon Musk said that the distinctive design and specs of the Model S sedans make it a befitting model to be sold directly to consumers. Dealers hold the view that Tesla is on its way to setting an example that would hurt the conventional method of selling autos.

Sproule said that just like in other states, the company will defend itself and the rights of consumers in Georgia. The Tesla spokesman did not comment on the company’s sales revenue in the state.