Tesla tries to safeguard its direct selling model in Virginia to expand its distribution network.
Tesla Motors is trying to defend its sales model. The American electric vehicle maker has taken a strong position against the lobbying efforts of independent automobile dealers in Virginia, United States. The company stated it will strongly safeguard its right to operate and open a second exclusive dealership in Virginia, against a litigation filed by franchised dealerships which stipulates the automaker is violating a 2014 contract with the authorities of the state.
Virginia Auto Dealers Association has filed a litigation in which it has claimed that the automaker is not allowed to set up its second direct sales store in Virginia till August 2017. The vehicle maker established its first store in the region in February two years ago, after it signed a contract with the Department of Motor Vehicle of Virginia (DMVV). Richard D. Holcomb allowed the company to attain a special direct selling license in December 2013.
Tesla officially said that the contract does not legally restrict it from filing a request to get a license to set up its second car dealership in the region, which the company exactly did previously in January. The independent automobile dealerships in the state nevertheless have claimed that they were not informed about the electric carmaker’s second property in Virginia.
A story earlier posted by Reuters, claims a member of VADA came to find out about a recent real estate agreement signed by Tesla, which alarmed them. In the request filed in January to the DMVV of Virginia, Tesla had requested a public hearing to possibly permit it to open its second dealership in the region.
The hearing would be held on March 31, 2016, which is the day on which the EV maker has planned to launch its affordable car, Tesla Model 3. On the other end, the lawsuit filed by VADA aims to block this hearing.
Unlike every mainstream automaker, Elon Musk’s company directly sells its automobiles through dedicated stores or websites – a concept also followed by Apple. The direct distribution model has many critics and followers – mainly mainstream vehicle makers and automobile dealership lobbies such as General Motors, which claim that the franchised dealers business is threatened by the direct selling model of the company.
Franchised dealers business is amongst the country’s biggest industrial sector. On the other hand, Tesla is striving to directly sell vehicles to customers from one state to another. Its own dealership offer greater consistency and control in customer service and plays a role in avoiding conflict of interest, which is faced at franchised dealers that often accommodate house models varying in the make and type of propulsion.