Tesla Motors Inc (NASDAQ:TSLA) has been involved in fights with numerous states and their dealer associations regarding the companies online sales of its Model S. The list of states opposed to the company’s direct-sale approach include and have included Texas, Arizona, New York, New Jersey, and Minnesota among others.
93B doesn’t apply to Tesla
Today, Massachusetts highest court ruled that car dealers like Herb Connolly Chevrolet, Fisker Norwood and an allied trade association, Massachusetts State Auto Dealers Association did not have leg to stand on in their efforts to block the Tesla Motors Inc (NASDAQ:TSLA) approach using a state law that was written to protect franchise owners.
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Those dealers and others had attempted to use a law known as Chapter 93B claiming that Tesla was endeavoring to avoid “Massachusetts law and to operate an automobile dealership without the required licenses.”
Justice Barbara Lenk said trade association members were not Tesla franchises and consequently 93B didn’t apply as she wrote the unanimous decision.
“Chapter 93B is aimed primarily at protecting motor vehicle dealers from injury caused by the unfair business practices of manufacturers and distributors with which they are associated, generally in a franchise relationship,’’ Lenk wrote. “We therefore affirm the judgment of the Superior Court dismissing the plaintiffs’ action on the basis of lack of standing.’’
Morgan Stanley cools on Tesla
While a victory for Tesla Motors Inc (NASDAQ:TSLA) , it didn’t stop the stock from seeing its single biggest one day loss since May. Ten days ago, Tesla CEO suggested that its stock was overvalued and effectively put the brakes on the soaring stock. Today, Morgan Stanley agreed and Tesla’s shares lost over 9% on the day.
Morgan Stanley analysts, led by Adam Jonas wrote in a note today that “We believe the shares are worth $320,” which is Morgan Stanley’s price target, “but perhaps not so quickly and not for some of the reasons we believe are driving the market.”
And beyond Tesla Motors Inc (NASDAQ:TSLA), they were even more bearish on the industry as a whole. “Tesla aside, nearly the rest of the auto industry’s efforts to successfully commercialize pure electric propulsion have fallen well short of the mark,” he wrote.
Tesla closed the day at $253.86 a loss of $25.34 per share down 9.08%.