Tesla Sues to Sell Cars in VirginiaApril 28, 2016
Tesla Motors, the manufacturer of the 2013 Car of the Year as decided by Car and Driver Magazine, recently spent some time in Richmond, VA with about 40 of their customers. The electric luxury car maker invited Virginia Tesla drivers out for a day on the track – Richmond International Raceway’s track, to be exact. But there was more at work than just a fun day at the races for Tesla and it’s customers.
Tesla Motors operates on a unique distribution model for a car manufacturer. They sell direct to their customers, cutting out car dealers and auto brokers, a model that doesn’t sit well with the Virginia Automobile Dealership Association (VADA) who are putting up a fight where they didn’t necessarily expect to find one.
Virginia franchise laws prohibit auto manufacturers from selling directly to consumers, but an exemption in the law allows manufacturers to do so if no other dealership can sell their vehicle “consistent with public interest”. Based on this exemption, Tesla applied for a license to sell their cars in Virginia. After two Department of Motor Vehicle hearings set to determine whether or not Tesla Motors met the requirements for the exemption, it was the recommendation of a DMV officer that Tesla be granted their license to sell cars in Virginia.
This was obviously great news to Tesla Motors, who sees Virginia as a key place to do business on the East Coast due to their central location along the I-95 corridor. Travelers going up and down the coast in their Tesla Motors vehicles could recharge at Tesla dealerships and get their cars serviced if need be. Currently, Tesla has a showroom in Tyson’s Corner, but they do not sell their cars from that location.
Tesla comes close to selling cars in Virginia
After the recommendation of the DMV officer to allow Tesla Motors to sell cars in the state of Virginia, many people were surprised to hear that the DMV commissioner had denied Tesla their request. The Commissioner turned down Tesla’s application to sell cars in Virginia following a statement from the VADA which made it clear that they did not support the DMV’s decision to allow the granting of a sales license to Tesla. But this decision appears to be in direct conflict with the provision made in the law as Tesla’s Director of Public Policy points out, “no dealer can make a profit selling Tesla alone”.
It may come as no surprise that Tesla has filed a civil suit in Fairfax County in protest of the DMV’s ruling. The license to sell in Virginia and states like it are important to Tesla Motors as they are not yet selling cars in a high enough volume to support the traditional dealership sales model.
Despite the conflict, it was a great day at the races
The 40 all-electric Tesla automobiles that showed up to take a few laps around the popular RIR racetrack in Richmond, VA sped around the track in silence. Despite the lack of sound, the Teslas burnt up the track. In addition to Virginia Tesla owners, state lawmakers and DMV officials were also invited out to check out what Tesla has to offer.
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