Massachusetts Court Throws Out Lawsuit Trying To Block Tesla From Selling Fancy Cars Directly To Consumers


High-tech electric car company Tesla has spent the year fighting with a huge number of states over their preferred business model: the company sells vehicles directly to consumers, instead of going through the traditional dealer route. Tesla has been wildly successful selling their cars this way. So successful, in fact, that dealers in many states are fighting hard to claim Tesla’s model is illegal under state law — or getting state law changed to make sure it’s illegal. Dealers in Massachusetts trying their own variation on that maneuver, however, have just had their case tossed out of court, allowing Tesla to continue operations in that state.

Reuters reports that the Massachusetts Supreme Judicial Court yesterday found unanimously that the Massachusetts State Automobile Dealers Association, and two other dealers also filing suit, lacked standing under state law to have direct Tesla sales blocked.

The state law in question was designed to protect car dealership franchise owners from abuses by car manufacturers, and therefore does not apply to Tesla, Justice Margot Botsford wrote, saying that “the type of competitive injury [the dealers] describe between unaffiliated entities is not within the statute’s area of concern.”

Tesla is not permitted to conduct direct-to-consumer sales in Arizona, Maryland, or Texas, and state legislatures in Missouri and New Jersey have also acted to ban direct Tesla sales. And although Tesla is permitted to sell cars in Georgia, dealers there are raising a stink over Tesla’s model being too successful.

The FTC is all for Tesla shaking up the traditional business model. The White House has declined to require states to permit direct-to-consumer Tesla sales, however, and Congress has no plans to address the bans on a federal level.

Tesla prevails in top Massachusetts court over direct sales [Reuters]