Tesla Motors Inc (NASDAQ:TSLA) have been allowed to sell cars directly by the state Department of Revenue, and for this reason it has been have sued by the Missouri Automobile Dealers Association (MADA). The department has been accused of violating the state law by licensing California-based Company as a franchise, and for this Dealers Association have filed a lawsuit in Cole County Circuit Court on Thursday.
Brief history of the dispute
Founded in 2003, Tesla Motors is led by the billionaire CEO Elon Musk, and sells vehicles from the company-owned stores and over the internet. It does use the traditional franchised dealerships route to sell its cars. According to the St. Louis Post-Dispatch, in June 2013, Tesla opened a $2 million service center in University City following which it was given a dealer license by the revenue department in the spring of 2013. Since then, the company has added many charging stations locally, and last month inaugurated a store in Kansas City. Tesla Motors’ franchise enables the electric car manufacturer to sell cars directly to the customers without the need to work through a dealership.
Tesla gets special privileges from the Department of Revenue claims the lawsuit. Michelle Glena, spokeswoman of Department of Revenue, said that the agency do not comment on the pending litigation.
Tesla undeterred by the lawsuit
Tesla Motors Inc (NASDAQ:TSLA) said that the lawsuit has been filed in an attempt to lower the competition, and calls the claims as groundless. The vice president of Corporate & Business Development, Diarmuid O’Connell, said that Tesla is an innovative company, and such cases are an attempt to deter it from bringing products directly to the market. The legal challenge is frivolous in nature as proven by the fact that MADA failed last year in bringing about any change in the existing Missouri law to make it applicable to Tesla, said O’Connell.
“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,” said O’Connell.
Tesla Motors Inc (NASDAQ:TSLA) has come under fire in the past as well. St. Louis Post-Dispatch also reported that last year, in the Missouri Legislature, an amendment to a bill was proposed to ban the direct-to-consumer sales by Tesla, but the amendment was eventually removed from the bill.