Tesla's consumer-direct approach passes legal muster in Mass.
Elon Musk's Tesla Motors is pioneering a new model of car distribution.
As CEO and co-founder of Tesla Motors, Elon Musk is known as a pioneer in the development of the all-electric car.
With Tesla's court victory in Norfolk Superior Court last week, Musk could become known as a pioneer of another revolutionary concept in the auto industry: the straight-to-consumer sales model. The model was called into question in a number of states including Massachusetts and Oregon.
Auto manufacturers have long had a system of selling their cars through third-party franchisees. But Palo Alto, Calif.-based Tesla (NASDAQ: TSLA) has a different approach, preferring to open its own showrooms, Apple-style, and bypass the middlemen. (The Tesla stores are different than typical car showrooms, in that you can't just drive the car you want off the lot, but you do interact with a screen that lets you design your own Tesla Model S sedan.)
This approach understandably doesn't sit well with the auto dealers in Massachusetts who worry that Tesla's Natick store could set a bad precedent for them. The Massachusetts State Automobile Dealers Association sued Tesla to stop its expansion here, arguing that state law prevents manufacturers from selling cars directly in the state. A judge dismissed that complaint in court last week.
Tesla opened its first store in Massachusetts at the Natick Mall in September. But Tesla has been unable to actually sell cars out of the store — Tesla calls it a "gallery" — without a license from the town. Last month, the board of selectmen voted to give Tesla a dealer license for a car store that would open at a West Central Street property instead of the mall (town zoning prevents a car salesroom at the mall).
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