Tesla Motors Inc (TSLA) Model S Test Drive Is Banned By Iowa Citing Violation of Law

Tesla Motor (TSLA)

Tesla Motors Inc (NASDAQ:TSLA) faces another hurdle as Iowa State bans Model S test drive. Model S is the latest electric car released by the company. The model is the Customer Report’s ideal overall automobile of 2014.

Even with the car’s comfort, efficiency, and the fact that the car is extremely environmental friendly, several U.S. states haven’t been deterred in their quest to ensure that state laws are implemented to the letter. States such as Arizona, New Jersey, Maryland, Texas, Virginia, and Iowa have law that requires that car sales be done through franchise dealerships.

Tesla Motor (TSLA)

The State asked the company to stop the test drives that had been scheduled for 3 days in West Des Moines. The warning issued by Iowa Department of Transportation states clearly that such test drivers are illegal since Tesla Motors Inc (NASDAQ:TSLA) a licensed auto dealer and the state’s laws don’t allow car manufacturers to sell their vehicles directly to customers. Tesla Motors Inc (NASDAQ:TSLA) had to stop the test drives on the third day after Iowa Department of Transportation got alerted by Iowa Automobile Dealers Association.

Tesla Motors Inc (NASDAQ:TSLA) doesn’t sell its cars through auto dealers and instead allows customers to order online or buy directly from their stores. This has angered many motor vehicle dealers in different states, leading to wide calls for the electric car manufacturer to stop doing business in those states. There are also states that only allow car manufacturers to sell a specific number of vehicles directly to customers in a year.

Many electric vehicle advocates have criticized the move by Iowa Department of Transportation saying that it stifles the much needed infrastructure and the benefits derived from the use of electric cars.

Tesla Motors Inc (NASDAQ:TSLA) Model S car offers great speed and can move as far a distance as gas-powered vehicles, making it more appealing to many users who were hitherto hesitant for the adoption of electric cars.

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2 Comments

  1. david said:

    This shows the strength of lobby in US policies including econony.
    The dealership mafia doent want customer to take advantage of free market and free
    competion. Please tell me what’s the added value of a dealership today when Internet
    let you know what car fits your need exactly?
    Why I can buy almost everything directly from manufacturer and not a car.

    • ShaneS said:

      Franchise laws served a real purpose – and still do for companies that sell their cars that way. We don’t need to dispense with them completely, simply carve out an exception for new companies that have never had a franchise dealer model. This continues to protect franchise dealers from takeover by the franchise owners, and allows direct market companies like Tesla to operate.

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