Tesla is Losing the Dealership Battle in Missouri

Tesla‘s disruption of the auto industry is not only limited to the technology in it’s vehicles–it also to the legislation that governs the auto industry as a whole. Yesterday, Missouri Judge Daniel Green ruled in favour of a 2015 suit by the Missouri Automobile Dealers Association (MADA) which claims that Tesla was wrongfully granted a dealer license.

The suit alleges the state created “an arbitrary, capricious, unreasonable structure that is unlawful” for automotive dealers in Missouri when it issued a dealer’s license to Tesla, allowing the company to sell its electric cars directly to consumers. Currently Missouri law, the automakers like Ford or GM cannot compete directly with dealerships in the state. The state however, granted Tesla a dealers license, allowing it to illegally sell directly to consumers.

“The Department (of Revenue) and Tesla… argue that Missouri law does not actually require a franchise agreement with another entity, and that Tesla’s issuance of a franchise to itself satisfies any requirement for such an agreement under Missouri law. The Court disagrees,” wrote Judge Daniel Green. “… This regulation does not alleviate Tesla from the franchise agreement from Tesla to Tesla; it merely indicates the documents that the Department will accept as proof of a franchise agreement between a franchisor and a separate franchisee. Tesla submitted no such documents, and the Department and Tesla both admit that Tesla has no franchisor, other than Tesla.”

This means that Tesla cannot own and operate it’s own dealership in the state, though it can maintain its operations whereby it can operate showrooms for customers who would then have buy the car online.

In a statement, Uber said that state statute permits Tesla to “sell directly and the State Agency has supported these laws by granting Tesla to serve its customers in Missouri. Following today’s trial court decision, Tesla will take all appropriate steps in the courts to ensure that Missouri consumers continue to have the right to choose how they purchase their vehicles.”

Tesla will continue to turn the state laws in its favor freeing them to not only keep the price lower for consumers, but also to uniformly define the customer experience.