Tesla Motors Inc (TSLA) Attacked By California Car Dealers

Updated on

Tesla Motors Inc (NASDAQ:TSLA) has been involved in many fights with dealerships and dealership organizations over the last four years regarding its efforts to directly sell cars to potential customers. In Texas, which has given Tesla fits, Tesla lost a battle to circumvent the dealer while a number of other states are seeing car dealership organizations and their lobbyists seeking legislation to hinder Tesla sales.

Tesla Motors Inc (TSLA) Attacked By California Car Dealers

Tesla’s website pricing fraudulant

In California, which has no legislation that prohibits direct sales, dealerships are going after Tesla Motors Inc (NASDAQ:TSLA) in a different manner altogether: by claiming that Tesla’s website pricing information is fraudulent.

In a letter to the California DMV, the California Dealership Association wrote, “Tesla Motors Inc (NASDAQ:TSLA) fails to provide required information and shatters the notion of comparison finance shopping by including the potential availability of incentives, gas savings, and tax savings into final payment quotes for prospective customers. This scheme is most blatantly demonstrated by the general ?$580 per month after gas savings advertisement found on several of its internal web pages.”

The association is also quick to point out that the Tesla Motors Inc (NASDAQ:TSLA) website nets out a $7,500 Federal income-tax credit in its advertised price. However, says the group, only 20 percent of Tesla buyers qualify for the credit, citing a report from the Congressional Budget Office.

Issue with resale numbers

The dealership association also takes issue with Tesla Motors Inc (NASDAQ:TSLA)’s resale numbers, the calculation of value in the use of HOV lanes, and its math when Tesla shows the difference in savings that electric cars have over gas-powered autos.

This is not the first time that groups have gone after Tesla Motors Inc (NASDAQ:TSLA) for its financing cost calculator. Motor Authority blasted the calculator and took it apart line by line, successfully showing that Tesla’s suggested numbers don’t add up to actual out-of-pocket expenses.

The California New Car Dealership Association has a point when it speaks about the “net pricing” tactic employed by Tesla.

Those that lease the Model S are able to immediately benefit from the federal tax credit as the lessor nets it out of the financed amount. However, buyers must pay the full amount, not the netted amount, and must then wait up to 15 months to take advantage of the federal credit—if they qualify.

Leave a Comment