2012 Tesla Model SEnlarge Photo
You might think it's no big deal for a carmaker to sell its cars directly to the public, but you'd be wrong. In fact, for dealers, it's a very big deal. For Tesla, it has become a big deal in court.
Dealers across the country have raised a cry against the company's direct-sales model, saying it violates laws in 48 states that have been on the books for decades, designed to protect consumers. Of course, it also protects the dealers' business models. Massachusetts has just such a rule requiring new car sales to be handled by franchisees, rather than the carmakers themselves.
Accordingly, the Massachusetts State Automobile Dealers Association filed suit against Tesla Motors [NSDQ:TSLA] after it opened its own factory store in Natick Mall, MA. The fight has been ongoing for months now, with the dealers having previously lost a bid for an injunction that would have closed the Tesla store in Natick Mall pending the outcome of the case. Now, the case has been dismissed.
Why, you ask? Not based on the merits of the dealer association's arguments, but on the ruling that the association didn't have standing to sue over the matter--in other words, the dealers don't have a legitimate grounds for complaint, regardless of the legality of Tesla's store.
The decision could presage similar decisions in other states, should dealer associations attempt to bring suit, but it won't be binding--the issue is a state-by-state matter, dependent on state laws and state courts. For now, the legality of Tesla's 17 factory-owned stores remains an open question.