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Tesla Fights for Right to Maintain Dealerships in Connecticut

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On: Thu, Jan 22, 2015 at 12:09PM | By: Bill Wilson

Tesla Fights for Right to Maintain Dealerships in Connecticut

The state of Connecticut is the site of the newest showdown between Tesla Motors and the National Automotive Dealers Association (NADA). The consequences for both sides in the battle are enormous. Should Tesla prevail, the century-old franchise dealer system could well be on its way to extinction. If NADA and its allies emerge victorious, then those who seek to transform the way the American public buys cars will suffer a serious setback. Either way, one side will be left face down with a bloodied nose.

The iconoclast automaker led by Elon Musk is no stranger to thinking outside the box. Tesla’s goal is to dominate the electric car market, which it sees as the future of personal transportation. To date the company has defied the odds, putting to shame naysayers who have predicted its collapse time and time again.

Tesla’s greatest contribution to its industry may not be just its vehicles (which are, admittedly, amazing) but the way it has changed public perception of battery-powered cars. Electric autos have traditionally been seen as low-powered “nerd mobiles” for eco-geeks with more idealism than practicality.

Tesla has shattered this conception, building cars that are sleek and fast, with remarkably high ranges per charge. Even more important than that, however, is the fact that its vehicles rightfully be described as “cool” and “sexy”, two qualities which Americans prize above almost all others.

Auto dealers have no problem with Tesla building marketable electric vehicles. They’re as happy to sell the California-based company’s products as those of any other manufacturer. Their problem is that the company is seeking to open company-owned stores across the nation. Not only does this threaten the interests of franchised dealerships, it goes against laws that have been in place for a century, ones that require automakers to use third parties to sell their vehicles to the public.

Each side has spent millions of dollars waging war in courtrooms from coast-to-coast. In some states NADA has come out on top, forcing Tesla to close its company stores within their borders. In others, Tesla retains the ability to sell its products directly to the public, albeit in a legal gray zone that may ultimately collapse.

The latest battlefield is Connecticut, which may not only allow Tesla-owned stores, it is considering passing a law guaranteeing their right to exist.

If this occurs, then dealers in the Constitution State fear that other manufacturers will follow suit, leaving them high and dry. They have mounted a nationwide campaign to win the public to their side, claiming that the traditional system encourages competition and gives buyers an advocate in disputes with carmakers. Tesla and those in its corner appeal to time-honored American values like free enterprise and laissez-faire economics.

How the battle will ultimately turn out is anyone’s guess. Some believe that Tesla will give up the fight and begin using traditional dealerships, once its sales volume reaches a high enough level to justify the expense. Others predict that the court slugfests will continue for years to come. Whichever way the dispute ultimately ends, it’s safe to say that the way cars are sold in the United States will never be the same.



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