Tesla’s Battles with Franchise Laws Worth Watching

Automotive News reports the current round of state legislative battles between Tesla Motors, Inc. and dealers looks like a draw so far.

In Arizona, a bill that would free the electric vehicle maker from that state’s ban on manufacturer-owned dealerships stalled. But the face-off might continue after last month’s announcement that Arizona is a finalist for Tesla’s $5 billion factory.

In Washington, after dealers pushed a bill that would have explicitly blocked Tesla’s business model, Tesla and dealers compromised. If lawmakers adopt the amended bill, Tesla will be allowed to freely operate and even expand.

Dealers contend that Tesla’s direct-selling model violates franchise and consumer laws in many states and Tesla should have to comply with the same rules other automakers follow. Dealers also fear Tesla’s stores could open a path for other manufacturers to sell directly.

Tesla executives say their stores operate legally and the company isn’t trying to overturn the franchised dealer system. They assert Tesla will fail unless allowed to operate its own retail network.