Tesla Motors Inc (NASDAQ:TSLA) is still pursuing a permit to launch its own store in Richmond so that it can sell its vehicles directly. However, the company has been facing a lot of opposition from local Auto dealers who enjoy a government-enforced monopoly protection.
Auto dealers have joined their forces to launch a legal battle against Tesla’s plans to sell the Model X, Model 3 and other models without going through middlemen dealerships. The battle is linked to a regulation that prevents vehicle manufacturers from selling their own vehicles and requires them to sell through dealerships. The Virginia Auto Dealers argue that the Tesla should not be excluded from the regulation but the electric vehicle manufacturer argues that it is not a conventional automaker. It is unclear why any vehicle manufacturer should be required by force to use middle men.
“We think more electric cars on the road is good for the world and good for our business certainly. We think the best way to do that is exclusively marketing them and selling them on their own,” stated Will Nicholas, Tesla’s spokesman.
Nicholas claims that it is not fair that electric vehicles should be sold parallel to vehicles powered by internal combustion engines. Tesla had previously argued that auto dealers will most likely not give the electric vehicles the same sales attention that they deserve since they also have to sell the regular combustion engine driven vehicles. The company also pointed out that having its own shops would allow it to educate buyers on how to handle or operate the electric vehicles effectively. It would also allow them to sell them at a lower price and make more sales, keeping the struggling company alive.
Tesla had filed a request with the Department of Motor Vehicles to be excluded from the law preventing manufacturers from owning dealerships. A recent hearing was held in Virginia to determine the fate of the battle between the firm and the dealers. One of the officers presiding over the hearing has issued a recommendation that the DMV should not accept Tesla’s request.
“Simply put, the evidence does not support Tesla’s request,” pointed out the hearing officer.
Tesla is still pursuing the request in the hope that the final decision will be in its favor. The company claims that allowing dealers to sell its vehicles will not turn in profits and will hurt the company.
Tesla stock closed the recent trading session at $196.05, marking a $2.25 drop from the value of the stock in the previous session with a trading volume of 115 shares and an average of 3.17 million shares.
