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Washington State Allows Tesla’s Direct Car Sales Model

April 11, 2014
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Tesla Motors Inc. has been battling several states to uphold its direct sales model, and has recently claimed victory in Washington. The electric car manufacturer is allowed to continue selling its products directly to customers in the state thanks to a compromise bill.

Last week, Washington Governor Jay Inslee signed a bill that lets Tesla continue selling its vehicles through factory-owned establishments rather than franchised dealers in the state. The bill not only allows Tesla to continue its operations, but also lets the company expand beyond the stores it already has. The automaker has showrooms in Seattle and Bellevue.

While the bill lets Tesla proceed with its direct selling model, it prevents other automakers from adopting such model.

Bryan Imai, senior general counsel at the Washington State Auto Dealer Association, pointed out that the bill only allowed direct selling for manufacturers that have secured a dealership license as of January 1st of this year. Tesla has had a dealership license in the state as of the given date.

Such specific condition prohibits future startup automakers from selling their vehicles without the help of dealerships.

According to Imai, the compromise bill reinforces existing laws which guarantees fairness between auto manufacturers and dealerships.

Tesla welcomes this newest development, a triumph among its many conflicts with other states. In a statement, the Elon Musk-led firm stated that the Washington compromise bill should serve as a “model solution” for other states where dealers have hindered the firm’s expansion by opposing the direct sales model.

In an email to Automotive News, Tesla spokesman Patrick Jones said that the company “thanks Governor Inslee and the Washington State Legislature for supporting a culture of innovation and ultimately making the right decision for consumers.”

He also said the bill will let Tesla “continue its mission of stimulating the market for electric vehicles by interacting directly with consumers.”

The National Automobile Dealers Association (NADA) does not seem happy with the news. NADA insists that sales should be through franchised new-car dealerships which are not owned by automakers.

“Consumers are better served by multiple retailers competing for their business,” it said in an email statement.

However, NADA said that the decision to allow Tesla or any other auto manufacturer to sell directly to customers is up to the state.

“It is up to each state to decide whether Tesla or any manufacturer is complying with the laws regulating the sale of new cars and light trucks,” it said.

Tesla may have won this fight but it is faced with another kind of battle at present, this time involving a lemon law.

Vince Megna, known as the ‘King of Lemon Laws,’ filed a lawsuit against Tesla. He claimed that the automaker ignored his client’s three demands for a refund after a series of problems with a Model S. Megna’s client is Robert Montgomery, a retired physician from Franklin, Wisconsin, who was said to have experienced issues such as fuse problems and malfunctioning door handles. According to Megna, the car had been in the shop for 66 days and that it had to be towed to Chicago for repairs.

Tesla fought back through a blog post in its website. It questioned the lawyer’s motivations and pointed out inaccuracies in his claims. The carmaker also suggested that the customer, who also filed a lemon law case against Volvo in the past, tampered with the vehicle.

Photo credit: Joe Wolf/ Flickr/ CC BY-ND

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