Tesla Motors Inc (TSLA) Faces the Latest Dealer Uprising in Georgia Against Direct Distribution Of Model S

Tesla Motor (TSLA)

Subsequent to five states namely New York, New Jersey, Ohio, Missouri and Pennsylvania, Tesla Motors Inc (NASDAQ:TSLA) now faces the dealership ire in Georgia wherein a petition has been filed by auto retailers barring the sale of its latest launch, Model S Sedan.

Representative of 500 dealerships, GADA, a name for Georgia Automobile Dealers Association, has submitted a petition wherein it has requested that not only should the brand be stopped from selling its Model S from its outlet at Marietta but that its license should also be revoked. At the core of the grievance is that fact that Tesla Motors Inc (NASDAQ:TSLA), instead of limiting their sales to 150 cars as required by state rules, sold as many as 173 units.

Tesla Motor (TSLA)

Much of this dealers’ anger is attributed to the fact that the company has decided to sell its $100,000 model directly to customers unlike the norm in the auto industry which dictates that products should be passed from company to dealers who would then pass them on to end users. Tesla Motors Inc (NASDAQ:TSLA) made this decision to eliminate the role of middlemen because its CEO, Elon Musk, was of the opinion that the unique make of the car rendered it being sold best through the company itself.

While Tesla Motors Inc (NASDAQ:TSLA)’s spokesperson, Liz Jarvis-Shean, declined to comment on this latest development, representative of the Georgia Dealers’ Agency, Nick Genesi, provided confirmation on the filing of the petition. In spite of the latest development, Tesla’s stock touched a record high of $269.70 since its IPO in June, 2010, thus registering an overall increase of 79% during this year alone.

Eric Ibara, who works as a senior analyst for Kelly Blue Book, made an observation –

“It’s difficult to find fault in the dealers association point that manufacturers should adhere to the existing laws. With the success of the Model S and the prospect of future Tesla products, it’s also not hard to envision a groundswell of Georgia voters petitioning their lawmakers into allowing for the sale of these cars in their state.”

On Elon Musk’s claims that Tesla’s sales figures in China might compare or even cross those in USA by 2015, Ibara commented –

“It may be that Tesla’s future rests more with sales in China so these battles will become less critical for Tesla to win.”

And this may well turn out to be a good reason as to why Tesla Motors Inc (NASDAQ:TSLA) remains unperturbed by the recent uprisings.

This article has been written by Vinita Basu.

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15 Comments

  1. Jon Laughlin said:

    Again its a case of the old technology resisting the introduction of the new. America’s entrenched Auto industry has been doing its best to keep the new car technology off the market for as long as I can remember and that is over 50 years.

  2. Robert Wilbert said:

    Speaking for myself, I feel it is about time that the model for vehicle distribution should be changed to allow for direct purchase from the manufacturer. The dealership model is outdated and only serves to increase the cost of the vehicles. I can understand GADA being upset, after all, they have had a sweet deal for the past hundred years and don’t want to see it end.

    • Edgar Burroughs said:

      “Salesman?” There isn’t one in a thousand that is anything more than an order-taker. Try this: Go to a car “dealership,” engage a “salesman,” and count the number of minutes before s/he asks you a question that would lead you to believe s/he is attempting in any way to assess your needs or requirements or desires for a car. In big-city “dealerships” the “sales force” turns over multiple times per year and adds absolutely no value to the process. In fact, other than warranty and recall service, the whole dealership is nothing but a leach and a profit project for some local big-wig. Totally useless.

  3. julez said:

    Oh boo friggin hoo. Get over it. Welcome to the new age of technology. Let them sell directly to the buyer. I’m tired of dealership over inflating prices of cars and limiting the quantity to do just that. It’s a scam. Get with the program. Let me buy online and have it dropped at my house. Hell, by drone if you have to.

  4. everdayjohn said:

    Eliminate the role of middlemen dealers and the inflated prices they impose on the buying public is a fantastic method to improve the Quality of vehicles sold in the USA whether Foreign Assembled or USA Assembled.
    Most of the public will support Elon on this effort. We need congressional support to make this a reality in the USA and rid us of the California dealers of inferior and higher priced vehicles so they can live at Malibu Beaches.

  5. Elio M Fernandez said:

    as pottential consummers ponder about who is going to serve their vehivles if there is no Dealers allowed to sell and service. this may become a disadvantage for Tesla which I love very much

  6. Elio M Fernandez said:

    I love Subaru but there is no dealers to serve them near Albany Georgia or Tifton GA. so against my will i own a TownCar, the same would go for Tesla

  7. Edgar Burroughs said:

    Why should a car dealer (or combination of car dealers) be allowed to stop a new company from doing business? The rationale behind requiring car manufacturing companies to have local physical dealers (not necessarily company owned) is antiquated and obsolete. It reflects a time when there were hundreds of car manufacturers and many/most of them were “fly-by-night.” Now, these laws are being used by frightened dealers to stifle progress. Not fair. Not needed. Go to hell.

  8. CeeJayy said:

    Electronic Cars are just like HDTVs or Personal Computers, Tablets or Cell phones. They are fully electrical appliances and do not use any gasoline, and thus should not be held to old sales regulations that would be absurd for TVs, PCs, or Cell Phones.

    As battery and even solar powered equipment become more plentiful – it is only logical for the consumer to vote with their dollars, just like they vote to purchase items from newegg.com, amazon.com, buy.com, etc.

    Any item that can be customized and ordered online – should be customized and ordered online.
    Just in time personal manufacturing reduces wastes and eliminates overproduction,
    it is good both for the whole economy and also great for the environment!

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