After opening several stores without much pushback, Elon Musk's ambition to replicate the Apple experience in Tesla factory stores is now facing potential roadblocks.
Dealer associations in a handful of states, and state regulators in at least one case, say Tesla's stores violate state franchise laws that prohibit factory ownership of dealerships. Electric-vehicle maker Tesla now operates 17 stores in 10 states and the District of Columbia, most in shopping malls. Another six are scheduled to open this fall.
The protesting dealer associations say Tesla's factory-owned stores present unfair competition for rival dealerships, are inconvenient for consumers needing repairs and, if left unchallenged, ultimately threaten the franchise system.
"If a manufacturer sees that Tesla is successful with this kind of business model, who's to say they don't break out their own EV product lines and create a separate system that bypasses dealers?" said Bob O'Koniewski, executive vice president of the Massachusetts State Automobile Dealers Association. "It's extremely problematic."
The New York State Automobile Dealers Association, concerned about just such an occurrence, recently asked dealer lawyer Leonard Bellavia to write a report for an upcoming newsletter on the threat of BMW using a direct-to-consumer model to retail its upcoming i-car line of electric vehicles. BMW has said it intends to distribute its i-cars through U.S. franchised dealers.
Tesla says it is doing whatever it takes to comply with state and local laws.
"We do what we're capable of doing, and we do whatever they let us do," said George Blankenship, Tesla's vice president of sales. "It's unique for each location. If we can't be a dealer in a mall, we won't do reservations on-site. We tell people where to go on our Web site to make a reservation."
Blankenship, the former Apple executive who developed that company's much-coveted retail network, is trying to replicate Apple's soft-sell, product-focused atmosphere in Tesla stores. Company employees can present the Tesla story better than independent dealers, he has said. Tesla opened its first store in Los Angeles in 2008.