Tesla in Battle Against Georgia Auto Dealers: We Didn’t Break The Rules

Californian automaker Tesla Motors has finally responded to attempts by the Georgia Automobile Dealer Association to ban it from selling its luxury electric cars direct to customers within the state, calling it a “thinly veiled attempt to stifle new innovation and eliminate consumer choice.”

It’s the latest battle in a never-ending war between auto dealer associations and the iconic automaker, which owns and operates its own mall-style sales outlets.

Tesla says it hasn't broken any rules in Georgia concerning auto dealer licensing.

Tesla says it hasn’t broken any rules in Georgia concerning auto dealer licensing.

At the end of last week, the Georgia auto dealers petitioned Georgia regulators to revoke Tesla’s dealer licenses within the state on the grounds that Tesla improperly obtained dealer licenses by taking advantage of a regulatory loophole designed for custom vehicle manufacturers with a total sales volume of less than 150 vehicles per year.

In reality though, it’s Tesla’s direct-to-customer sales model — in which Tesla negates the need for third party, independent, franchised auto dealers — which has yet again upset auto dealer associations.

As we reported on Monday, Georgia auto dealer associations want the state to revoke Tesla’s existing dealer licenses, forcibly causing Tesla’s existing Atlantan store to close and scuppering its current plans for two future Tesla stores in the state. In addition, say representatives for the auto dealer unions, Tesla should be banned from applying for future licenses.

Late Tuesday evening, Tesla broke its silence on the latest challenge to its business model, refuting GADA’s claim that it was in non-compliance with Georgia auto dealer laws.

“Tesla has been and remains in full compliance with all Georgia laws in the opening and operation of its retail operations in that state,” Vice President of Communications and Marketing Simon Sporule told Bloomberg in an email, adding that the GADA petition was “nothing more than a thinly veiled attempt to stifle new innovation and eliminate consumer choice.”

The GADA says it wants a level playing field for all, but the battle is really about protecting the future of auto dealers.

The GADA says it wants a level playing field for all, but the battle is really about protecting the future of auto dealers.

As in other states, Tesla’s direct-to-customer sales model has very little impact on the automotive industry, accounting for a tiny percentage of total car sales in each state. Even in the city of Atlanta, Georgia — where electric vehicle adoption rates are among the highest in the U.S. — Tesla’s total annual sales figures are less than many mainstream auto dealer chains.

In reality, GADA’s attack on Tesla — mirrored across the rest of the U.S. — isn’t about preventing Tesla or electric cars from being sold across the U.S. It’s about ensuring there isn’t a precedent for direct-to-customer sales set that mainstream automakers could follow.

Tesla’s impact on the auto industry is still relatively small, but should a major automaker like Ford, GM or Toyota switch to direct-to-customer sales, the impact on the auto dealers would be immeasurable.

As with other battles between Tesla and auto dealer associations, we’ll be sure to bring you the latest on this story as it develops.

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