In a new development in Tesla’s direct sales battle, it looks like it might be about to lose its right to sell cars in Missouri despite currently operating stores in Kansas City and St. Louis. The automaker has been in the state since 2013, but now a judge is siding with the local dealership association against Tesla.
The St.Louis Post-Dispatch reports:
“After Tesla opened stores in University City in 2013 and Kansas City in 2014, the Missouri Auto Dealers Association sued the Missouri DOR and its director in January 2015, alleging its direct-to-consumer model violates state law.”
Interestingly, in order to sell its cars in Missouri and obtain a dealership license, the automaker had to authorize itself to sell its cars in the state. Its application read “Tesla Motors … authorizes Tesla Motors” to sell Tesla vehicles.
Today, Judge Daniel Green ruled on Missouri Auto Dealers Association (MADA) case and wrote:
“a single entity may not manufacture vehicles for sale in Missouri and possess a Missouri new motor vehicle dealer license,”
Now Tesla is not losing its current licenses for the Kansas City and St. Louis stores, but it will not be able to renew if the judgment stands after Tesla’s appeal, which is clearly putting its business in Missouri in jeopardy.
MADA successfully managed to sue the Missouri DOR in order for the government to force consumers to buy their vehicles through third-party dealerships.
As we often reported in the past, Tesla doesn’t use the third-party franchise dealership models like most automakers in the US and instead owns all of its stores. It is still struggling to instate its distribution model in several states, like now in Missouri, where the auto dealer associations are pushing back and trying to force Tesla to use their model through legislation preventing automakers to own auto dealerships.
One of the main reason why Tesla refuses to go through third-party dealerships is their proven inability to sell electric vehicles either due to the lack of desire or knowledge. Of course, the other important reason is that dealerships make most of their profit on servicing the vehicles they sell, while Tesla aims not to make a profit on service.