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“If a licence is not granted with proper authority, then that license should be rescinded,” said Sara Bruce, vice president of legal affairs for the Ohio Automobile Dealers Association.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