Tesla Motors Inc (NASDAQ:TSLA) dealership in Missouri might lose its license following a judicial decision brought against the company by local auto dealers.
Missouri’s automotive dealers filed the lawsuit against Tesla in 2015 in a complaint against the company being issued a license to sell its vehicles directly to the customers. The dealerships argued that it was unfair that the manufacturer was given a license to open its own dealership while the law strictly states that manufacturers should not have their own dealerships. The Auto dealers argued that the license allowed the company to bypass dealers and sell on its own.
It looks like auto dealers might have bagged themselves a win against Tesla following a judicial ruling on Wednesday by a Cole County Circuit Court judge. “Subject to limited exceptions that are not applicable in this case, a franchisor is prohibited from owning or operating a new motor vehicle dealership in Missouri,” pointed out Judge Green who presided over the case. Tesla along with the Department of Revenue had presented an argument that the Missouri law does not call for a franchise agreement with another party. The electronic automaker also argued that having its own franchise would be in line with any law in the state.
The Judge disagreed with Tesla’s point of view. “This regulation does not alleviate Tesla from the franchise agreement from Tesla to Tesla; it merely indicates the documents that the Department will accept as proof of a franchise agreement between a franchisor and a separate franchise. Tesla submitted no such documents, and the Department and Tesla both admit that Tesla has no franchisor, other than Tesla,” pointed out the judge. What this means is that Missouri cannot hand over a dealer license to Tesla.
The ruling only prevents the company from selling its own cars through its own dealership but the company has the option of teaming up with other dealers to make the vehicles available to buyers. Tesla can, however, parade its vehicles in public and buyers can go online to purchase the Tesla vehicles.
