Tesla says it didn't violate Georgia regulations

Photo credit: BLOOMBERG

LOS ANGELES (Bloomberg) -- Tesla Motors Inc., facing a challenge from Georgia dealerships over how it sells cars, said claims made in a petition filed on behalf of auto retailers in the state that it breached its license agreement aren’t valid.

The Georgia Automobile Dealers Association filed a complaint with the Georgia Department of Revenue last week, saying Tesla broke state rules which stipulate it’s limited to selling fewer than 150 of its electric sedans directly to customers each year.

Tesla said the sales restrictions under its license agreement are applicable on a calendar year basis. GADA, which represents 500 retailers, said in its Aug. 29 petition that Tesla sold 173 sedans in the period from October to June.

“Tesla has been and remains in full compliance with all Georgia laws in the opening and operation of its retail operations in that state,” Tesla spokesman Simon Sproule said by e-mail on Tuesday. The petition “is nothing more than a thinly veiled attempt to stifle new innovation and eliminate consumer choice by trying to establish a monopoly that restricts the way consumers can buy new vehicles.”

The Georgia dispute is the latest spat this year Tesla has had with dealers, following fights in Missouri, New Jersey, New York, Ohio and Pennsylvania.

Tesla CEO Elon Musk has said the unique nature of the Model S sedan, and electric cars generally, are best sold through the company’s stores and staff. Dealers, on the other hand, say Tesla’s approach could set a precedent that could undermine how franchisees have sold autos for decades.

In Georgia, Tesla operates one store outside Atlanta in Marietta. The petition also said the carmaker breaks a condition of its license that allows it only to sell vehicles made “in accordance with custom design specifications of the customer.” The group asked the state agency to suspend Tesla’s sales license and prevent it from continuing to sell cars there.

“As with similar battles in other states, Tesla will use all means necessary to defend itself and the rights of consumers to decide how and where they spend their hard-earned money,” said Sproule. He declined to discuss Tesla’s sales volume in Georgia this year.

Nick Genesi, a spokesman for the state agency, didn't immediately reply to an e-mail message on the matter.

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