Business

Tesla Motors Reaches Deal To Keep Stores Open In New York

The agreement with New York's dealerships will let the company's existing stores stay open, but all new stores will have to go through a dealer.

Tesla Motors Reaches Deal To Keep Stores Open In New York
Tesla Motors
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Tesla Motors seems to do everything a bit differently, and its controversial practice of bypassing auto dealerships has gotten the company into a lot of legal traffic jams. But now Tesla has finally gotten the go-ahead to keep selling its cars directly to consumers in New York State.

"A new deal will allow electric car company Tesla to stay here in New York. The company's five stores in New York will remain." (Via WABC)

The New York Automobile Dealers Association had been pushing to shut down Tesla's stores because they sell directly to the consumer. The deal will allow the five existing stores to stay open but any future locations have to be through a dealer. (Via Tesla)

In a blog post, Tesla owner and founder Elon Musk, argues the company must sell directly to the consumer in order to survive. "The auto dealers have a fundamental conflict of interest between promoting gasoline cars, which constitute virtually all of their revenue, and electric cars, which constitute virtually none."

But even with a deal done in New York, Tesla is still involved in similar fights all over the country. Texas, Arizona, Maryland and Virginia all ban direct-to-consumer sales, and a similar ban in New Jersey is set to go into effect April 15th. (Via CNN)

In New Jersey, Tesla is fighting with the New Jersey Coalition of Automobile Retailers, or NJ CAR, which recently pushed the state to start enforcing the ban.

"This isn't about the car. ... Tesla has chosen an unwise, and in New Jersey unlawful, distribution model. It's unwise because it doesn't advance the public interest in price competition or in public and highway safety." (Via CBS)

In an interview with The Verge, Jim Appleton, President of NJ CAR added, "[Musk's] legal opinions are about as sound as my programming abilities."

But the dealership organizations are getting a lot of blowback. Critics say they don't see the value in dealership laws, and that the $676 billion auto dealer industry is just being greedy.

The New York Times writes, "The fight with Tesla is not really about this niche company ... The dealers are afraid that if Tesla is allowed to sell directly to consumers, General Motors, Ford and other carmakers might be emboldened to do so as well. ... Instead of fighting Tesla, dealers should be improving customer service.‚Äč"

Tesla's New York deal still has to be approved by the state's legislature, but according to The Wall Street Journal it has the governor's and legislative leaders' support, so approval is all but certain.