Tesla gets sued by car dealers afraid to compete with them

Tesla is still facing some direct sales bans in the US, and the saga seems to have no end. The company is now being sued by the New Jersey Coalition of Automotive Retailers who took them to court to try to avoid competing with Tesla.

In the Superior Court of New Jersey, the car dealers claimed that Tesla and the state violated franchise dealers law meant to protect them.

Several states have laws preventing automakers to own their own dealerships.

The goal was to protect franchise dealers against unfair competition from their own automakers, but some car dealer associations have used them to prevent Tesla from opening their own locations, despite the fact that the automaker doesn’t have and never had any franchise dealerships.

In 2015, New Jersey allowed Tesla to open four sales location in the state.

The car dealers’ association believes that Tesla should have never been allowed to open those locations.

Tesla also opened an additional location called “gallery” to showcase its products, and the association states in the complaint that they shouldn’t be able to operate this location.

They wrote in the complaint (via Auto News):

Whether or not any sales are finalized at Tesla’s gallery, the above-mentioned activities that take place at the gallery are designed and intended to lead to a sale and certainly constitute ‘offering vehicles for sale.’

The complaint also claims that Tesla is participating in “internet advertising violations, including erroneously describing the Autopilot driver-assistance system as “self-driving” and listing Model 3 incentives and estimated gas savings without listing who is eligible or how the estimates were calculated.”

Electrek’s Take

We have made our view on the direct sale issue clear, but this particular case is even more infuriating because it reeks of desperation. And yet, Jim Appleton, president of the coalition, said this in a statement:

It may appear ironic that the head of a trade association that represents new car dealers is suing the State of New Jersey to urge enforcement of the strict laws that regulate new car dealers. But NJ CAR has spent decades advocating for firm and fair rules that create a level playing field and promote a competitive marketplace that benefits consumers and honest business owners, alike. Neighborhood new car dealers don’t fear competition from Tesla — which accounts for less than 1% of the new car market in New Jersey — they simply object to unfair competition which places consumers at risk and local businesses at a competitive disadvantage.

“We don’t fear Tesla.” Yeah, right. Then why are you suing them to prevent them from competing?

That’s all they are doing, and they know it.

They even say it may appear “ironic.” Yes, it is ironic — because they are using laws that were put in place to protect them against unfair competition to unfairly protect themselves against perfectly fair competition.