Tesla Motors Inc (NASDAQ:TSLA) achieved a milestone in its direct sales after winning a legal battle against the Massachusetts State Automobile Dealers Association. Tesla Motors is facing similar charges in different states and this judgement is likely to help it in future legal battles.
The case came into light when the Massachusetts State Automobile Dealers Association went into court two years ago claiming that Tesla Motors Inc (NASDAQ:TSLA) has broken the Massachusetts law by selling cars directly to the consumers through its showrooms. The case was dismissed because of the “auto dealers’ lack of standing and failure to state a claim.”
The primary take from the ruling is that Tesla Motors Inc (NASDAQ:TSLA) is not into screwing its customers for profits. Earlier, these laws were passed to offer protection to the consumers against large automobile companies such as General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) by involving third-party car dealerships in the equation. Here is a short brief from the ruling:
“[The law is] aimed primarily at protecting motor vehicle dealers from injury caused by the unfair business practices of manufacturers and distributors with which they are associated, generally in a franchise relationship.”
According to the court’s judgment Tesla Motors Inc (NASDAQ:TSLA) is not infringing the rights of franchise while showcasing its vehicles at showrooms and getting orders online. The court further stated different ways in which a car company can handle third-party sales personnel.
The ruling is a relief for Tesla Motors Inc (NASDAQ:TSLA), as the company is facing similar legal troubles in Georgia, immediately, where Georgia Automobile Dealers Association has filed a petition stating that the company should stop selling Model S and its license should be revoked.
This article has been written by Prakash Pandey.