Tesla’s long ongoing state-by-state battle to sell its electric cars directly to consumers without having to go through third-party dealers just received a significant setback. In Missouri, where Tesla already managed to get a dealer license and has been selling its vehicles online and through stores in St-Louis and Kansas City, a judge rejected the company’s license renewal after the Missouri Auto Dealers Association (MADA) sued the revenue department, which first issued Tesla’s license in 2015.
In consequence, the automaker will lose its right to sell cars in the state tomorrow as its current license expires.
Previously, Tesla mainly had to worry about states where laws are currently preventing them from getting dealership licenses, like Michigan or Texas, but now it looks like Tesla’s direct to consumer business model is not safe even where it already had a license.
On Wednesday, a circuit judge ruled in favor of MADA’s interpretation of the law that vehicle manufacturers cannot possess a dealership license. The St-Louis Post-Dispatch reported:
In his ruling in favor of MADA’s motion for summary judgment in August, Judge Green wrote that “a single entity may not manufacture vehicles for sale in Missouri and possess a Missouri new motor vehicle dealer license,” under state law.
Of course, MADA was pleased with the judgment since its members will get to keep their monopoly on car sales in the state and they will not have to compete against Tesla.
Tesla plans to appeal and to ask the Court of Appeals to issue a stay of the trial court’s decision so that it can be business as usual at its stores and “in order to prevent an immediate and unnecessary loss of jobs, tax revenue, consumer convenience, and consumer choice for Missourians,” until the Court of Appeals takes a decision.
The company wrote in a statement:
“Tesla has been selling cars in Missouri for almost four years and employs numerous people at its Missouri sales locations. We do not believe that we should have to close up those sales operations while the Court of Appeals considers whether we may continue selling in the state.”
It’s not clear what will happen of Tesla’s stores in the state though Tesla has been operating locations as “galleries”, where employees don’t sell cars but educate customers on the company’s vehicle lineup, in states where Tesla isn’t able to get a dealership license.
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. A recent study gave reason to Tesla for selling electric vehicles through company-owned stores.
While the company has been mostly working with legislators in states where it has issues with direct sales, Tesla recently started to take legal approaches instead in other states, like in Utah and Michigan.