Tesla Vs Ohio Dealers Associations: Dealers Hit Back With Court Action

A few weeks ago, we told you about the successful defeat of a proposed anti-Tesla amendment which certain pro-dealer Ohio legislators had attached to a completely unrelated bill in an attempt to prohibit Tesla from selling cars directly to customers within the state.

The fight between Tesla and Ohio auto dealers associations rumbles on, but who will win?

The fight between Tesla and Ohio auto dealers associations rumbles on, but who will win?

The proposed amendment to Senate Bill 137, a bi-partisan, benign, universally-supported bill designed to improve the safety of the men and women who look after Ohio’s roads, was successfully cast out two weeks ago before the bill itself was passed unanimously 12-0. The news — which we broke here on Transport Evolved appeared to suggest that Tesla had won yet another battle against America’s wealthy and highly influential auto dealer unions, but the latest news from the Buckeye State suggests Ohio autodealers aren’t taking Tesla’s most recent victory lying down.

Instead, a group of Ohio auto dealers, including Midwestern Auto Group of Dublin, Ricart Automotive Group of Groveport, and several others, has asked a Franklin County court to revoke Tesla Motors’ [NASDAQ:TSLA] licence to sell new cars in the sate.

The plaintiffs claim that Tesla’s current license to sell in the state is in violation of Ohio law, putting Tesla at an unfair advantage within the state.

“If a licence is not granted with proper authority, then that license should be rescinded,” said Sara Bruce, vice president of legal affairs for the Ohio Automobile Dealers Association.  Tesla meanwhile, isn’t phased.

“This is the same kind of bullying from the dealers we’ve faced in other states,” said Tesla’s vice president of regulatory affairs and associate general counsel James Chen.” The dealers, when they’re defeated in the court of public opinion, in the media, and in the legislature, they then go to the courts.”

The court paperwork submitted at the Franklin County Common Please Court hinges on one small fact which the plaintiffs claim makes Tesla in violation of the law. Namely, that the acquisition of a license to sell cars in the state requires the ‘dealer’ to show a copy of the contract between them and the automaker of the cars they intend to sell in order to prove they are a bone-fide dealer. Because of Tesla’s unique business model, this would require Tesla to be both automaker and dealer.

Ohio Auto Dealers want to stop this in Ohio.

Ohio Auto Dealers want to stop this in Ohio.

In other words, Ohio autodealers say Tesla can’t sell in state because it can’t sign a contract with itself, and without that contract, its license application isn’t legal.

Tesla’s first store in Ohio opened earlier this month in Easton Town Centre, Columbus, Ohio, but those bringing the case against Tesla — and the Ohio Department of Public Safety and Ohio Bureau of Motor Vehicles — say they want the Tesla Store to be immediately closed. In addition, the case, filed last week, wants to prohibit the Bureau of Motor Vehicles from issuing further licenses to Tesla until such point that the automaker uses the same franchised business model other automakers rely on to sell their cars.

With the court papers filed, a hearing is expected to take place some time within the next month, although no dates have been set yet.

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Nikki Gordon-Bloomfield
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Nikki Gordon-Bloomfield

Self-confessed geek and mother of two, Nikki has been talking and writing about cars ever since she passed her driving test. Back then, her Internet contributions were all classic car-focused. Now, she’s all about greener, cleaner, safer and smarter cars.
Nikki Gordon-Bloomfield
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  • Michael Thwaite

    Suing a US company because they’re stealing your lunch? Couldn’t you just fight them by providing a better product?

    • Mark Chatterley

      This is what confuses me. Isn’t the US all about the ‘free market’? If that model really works, let Tesla do what they like and then the ‘free market’ will force the dealerships to adjust or die.

      • Michael Thwaite

        Do as I say, not as I do.

      • Jonathan Tracey

        The fact that a law that favours the dealers rights in this way over the manufactures rights shows the power of lobbying, I am struggling to see why its any different from Apple selling its products in its own stores, you dont see best buy going to court to stop them selling laptops.

      • alvord1430

        The free market will eventually prevail. The dealer network has been very good for auto sales because they move large volumes of cars for auto manufacturers. The dealer model doesn’t work for Tesla right now. Nissan dealers still don’t give a crap about selling the Leaf. That kind of dealer attitude would sink Tesla.

    • http://twitter.com/brian_henderson Brian_Henderson

      No stealing of lunch here u2026 It’s like the dealer’s association is suing because you bought lunch from a store on the other side of the street.nnAgree, the company with a better product and/or service is going to be the winner. By forcing such laws to be enacted, and twisting the intent of existing laws the dealers are doing a disservice to these communities.

  • u010eakujem

    This isn’t the last time we’ll see this sort of nonsense from auto dealers scared of losing their monopoly.

  • PaulScott58

    These Ohio dealers should be ashamed of their pathetic attempt to bully Tesla. As Michael Thwaite says, just provide a better product and fight them fairly.nnnEvery member of this dealer organization, as well as every employee of all the dealers in the state of Ohio, regularly break traffic laws every time they drive to and from work. Everyone does, and breaking these laws endangers peopel’s lives. So to take a phrase in a law and use that to try and prevent a legitimate company from competing against you shows hypocrisy of an astounding level. Ohio car dealers are pathetic cowards afraid to compete against their worst nightmare, a better product.

  • Andyj

    I’m not a US citizen so may be off base here. If I went to a Tesla store, chose my preferences and reserved a car. Would I be receipted at the shop? In law this is the “dealer” who can also sign up the required paperwork.

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