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

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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