According to a new report from the Wall Street Journal (paywall), Tesla’s legal team has been preparing for a challenge of direct sales law before the federal court instead of the state by state battles that the company has been fighting for years now.
Due to its business model of selling directly to consumers without a third-party dealership, Tesla is currently not allowed or under restrictions to sell its cars in several states including Arizona, Michigan, Texas, Connecticut, Utah and West Virginia.
According to the WSJ report, Tesla’s legal team led by General Counsel Todd Maron has been studying a 2013 federal appeals court ruling in New Orleans that made it legal for a monastery in Louisiana to sell monk-made coffins directly to customers without having to go through a funeral home or having a funeral director’s license.
Tesla is drawing similarities with its own business model as an automaker selling cars directly to customers without going through dealerships.
Todd Maron on direct sales:
“It is widely accepted that laws that have a protectionist motivation or effect are not proper. Tesla is committed to not being foreclosed from operating in the states it desires to operate in, and all options are on the table.”
The WSJ cites the Federal Trade Commission and Institute for Justice attorney Greg Reed agreeing with Tesla. Reed said:
“There is no legitimate competitive interest in having consumers purchase cars through an independent dealership,”
The only organisations taking a stand against repealing the prohibition of selling cars directly from the manufacturers to consumers are the dealership lobbying groups and a select few established manufacturer like GM. At the unveiling of the Chevy Bolt, GM CEO Mary Barra even taunted Tesla by saying:
“Unlike some EV customers, Bolt EV customers never have to worry about driving to another state to buy, service or support their vehicles.”
GM later backed the effort in Indiana to introduce new legislation to ban direct car sales and consequently make more difficult for Tesla customers in the state to buy or service their vehicles.
It’s not clear how, when or even if Tesla will be able to bring the case before a federal court, but in the meantime, the company is already entrenched in state direct sales challenges in Utah, Connecticut, Michigan and Indiana.