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Tesla and their strategy to sell EVs are coming under fire

A few months ago, Tesla opened their first store this year at the Westchester shopping mall in New York. This might not seem a big problem, however the National Automobile Dealers Association has had issues with Tesla’s store, with critics pointing out that forty-eight state prohibit company-owned car dealership.

Now there are three stores in New York City but their presence has been challenged by the Greater New York Automobile Dealers Association. Interestingly enough, that lawsuit was dismissed, only for Tesla to be sued again by dealers in New York and Massachusetts claiming that it was violating franchise laws.

Tesla’s CEO and co-founder, posted an entry on his blog dismissing these new accusations and defending the electric car maker’s approach to selling their product.

He argues that Tesla isn’t threatening the current automobile franchise system and it is not violating any state laws.

The crux of the matter can be found in the fact that the laws prohibit factory-owned dealerships in order to avoid competition with independent dealers, but that rule shouldn’t apply in Tesla’s case since they haven’t granted any franchises anywhere in the world, so there is nothing to compete against.

Another point raised in the blog post is that if they were to follow the current strategy, then traditional car dealers would have a conflict of interest because they’d have to choose whether or not to convince buyers of the merits of purchasing an Electric Vehicle, or would just simply sell one of their conventionally powered vehicles, which he adds, make up the bulk of their stock.

As far as the consumer service aspect is concerned, the CEO points out that by the end of the year, Tesla will have more service centres than stores, even in places in which it has no retailers.

All of these seem to be rather well thought out and reasonable arguments, and one has to consider that Tesla has lawyers that have been pouring over the laws and rules before they started building their first store, we’ll just have to see what happens next.

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