Missouri dealers file suit to block Tesla sales
Missouri auto dealers filed suit to block Tesla Motors’ direct manufacturer-to-consumer sales in the state.
The Missouri Automobile Dealers Association on Thursday filed a lawsuit in a state court, accusing the Department of Revenue and its director, Nia Ray, of violating Missouri law by allowing Tesla to sell its vehicles without a franchise dealer.
MADA is asking the court to stop the state department of revenue from renewing Tesla’s license for its University City, Mo., store and from granting Tesla other dealer licenses throughout Missouri.
“For many years, new motor vehicles have been sold in Missouri using a tried-and-true structure: manufacturers do not sell cars themselves, but do so through a network of licensed dealers,” the lawsuit said. “This structure of separate roles for manufacturers and dealers is established by statute and reflects wise public policy.”
Missouri law says that automotive manufacturers can only sell cars through dealers. When the department of revenue issued Tesla a dealer license, it “violated both the law and the structure that’s been in place for many years,” said Lowell Pearson, attorney for MADA and former deputy director of the department of revenue.
“Missouri requires any state agency to change policy through formal rule making process… the department didn’t do any of that here,” he added. “It created a new public policy for the state by issuing a license to Tesla.”
Tesla opened its store in University City, Mo. in June 2013 after it was issued a dealer license by the revenue department. The automaker also has multiple charging stations in the state, according to its website.
Reuther Ford Inc., a family-owned new-vehicle dealer in Herculaneum, Mo., and Osage Industries, an ambulance manufacturer required to sell through Missouri dealers, are also plaintiffs in the case.
“Both of them are being treated differently and in a discriminatory manner compared to Tesla,” Pearson said.
Revenue department spokeswoman Michelle Gleba told Automotive News that the department does not comment on pending litigation.
In May, a provision to the bill, Missouri HB 1124, which primarily deals with all-terrain vehicles, that would ban direct sales from vehicle manufacturers was ditched before it reached the Missouri Senate floor, Automotive News reported.
"Today’s lawsuit is a desperate attempt to prevent an innovative company like Tesla from bringing products directly to market,” Diarmuid O’Connell, Tesla’s vice president of corporate and business development, said in a statement.
"Missouri law is very straightforward in that it prohibits manufacturers that use independent franchisees from competing directly against them. This has nothing to do with Tesla, which has never used independent franchisees. The fact that MADA tried and failed last year to change existing Missouri law to make it apply to Tesla, proves the frivolousness of this legal challenge.
"The goal of both this lawsuit and anti-Tesla legislation is to create a distribution monopoly that will decrease competition, hurt consumer choice, and limit economic investment in Missouri. We will continue to oppose these efforts to advance anti-free market regulations both in Missouri court and in the legislature."
MADA president Doug Smith told reporters during a conference call last week that the problem isn’t Tesla itself, but the way the company sells its vehicles, the St. Louis Post-Dispatch reported.
“We’d love to see Teslas all over the road,” he told them. “We’d just like them to sell through dealerships like any other [manufacturer].”
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