A new lawsuit is targeting Tesla stores, this time in Missouri. Filed by the Missouri Automobile Dealers Association (MADA), the legal action calls Tesla’s direct sales to consumers illegal.
“For many years, new motor vehicles have been sold in Missouri using a tried-and-true structure: manufacturers do not sell cars themselves, but do so through a network of licensed dealers,” stated the lawsuit. “This structure of separate roles for manufacturers and dealers is established by statute and reflects wise public policy.”
MADA calls out the Department of Revenue and Director Nia Ray, saying both have violated the law by granting a dealer license to Tesla. The lawsuit asked the court to prohibit Tesla’s license from being renewed, essentially barring sales of the electric car in the state.
Tesla currently has one store in Missouri, located in the St. Louis metro area. The company opened its University City location two years ago and has installed a few small charging stations around the state.
Joining the MADA as plaintiffs in the lawsuit is dealer Reuther Ford Inc., and ambulance manufacturer Osage Industries. The latter says it’s being discriminated against because the law requires the company to sell ambulances through franchised dealers.
“Today’s lawsuit is a desperate attempt to prevent an innovative company like Tesla from bringing products directly to market,” said Diarmuid O’Connell, Tesla’s vice president of corporate and business development, in a written statement.
The current legal action follows up a failed attempt in 2014 to change a state law. Last May, Missouri legislators added wording to an unrelated bill on all-terrain vehicles in an effort to block car sales outside of franchised dealers. Tesla said both the bill and the lawsuit will create a monopoly for dealers.
“Missouri law is very straightforward in that it prohibits manufacturers that use independent franchisees from competing directly against them. This has nothing to do with Tesla, which has never used independent franchisees,” said O’Connell.
“The fact that MADA tried and failed last year to change existing Missouri law to make it apply to Tesla, proves the frivolousness of this legal challenge.
“The goal of both this lawsuit and anti-Tesla legislation is to create a distribution monopoly that will decrease competition, hurt consumer choice, and limit economic investment in Missouri. We will continue to oppose these efforts to advance anti-free market regulations both in Missouri court and in the legislature.”
Four other states have been successful in adding similar language to existing laws. Arizona, Michigan, New Jersey and Texas currently ban manufacturer-direct sales of cars. Similar to the Missouri lawsuit, representatives with these states have said that direct sales were already illegal, and words were only added to the rulebooks to clarify the law.
“This bill does not, as some have claimed, prevent auto manufacturers from selling automobiles directly to consumers at retail in Michigan – because this is already prohibited under Michigan law,” said Michigan Governor Rick Snyder after signing House Bill 5606, which prevents Tesla sales.