Tesla Alleged By California Car Dealers To Be Violating Advertising Laws

Tesla is based in California, has the most stores there, and sold nearly half of its Model S sedans in the state this year, but the California New Car Dealers Association is now saying Tesla is benefiting from shoddy advertising practices.

While other state dealer trade groups have accused Tesla of violating franchise laws, in California the LA Times reports the EV maker allegedly misleads would-be buyers with details including how it calculates costs of its Model S.

For example, noted the dealer association, Tesla automatically deducts the $7,500 federal tax credit from its advertised price despite the fact not all buyers owe $7,500 in federal taxes, thus may not be able to recoup this benefit.

Tesla also touts the benefit of driving solo in California’s HOV lane without mentioning there is an application process involved, said the Times.

The dealer group said if a person checked every single box on Tesla’s Web site’s cost calculator for its high-five figure car, the monthly payment would drop to $114 per month. This, notes the Times, is lower than the $139 payment on the least expensive new car sold in the U.S, a Nissan Versa.

For Tesla to make it possible for consumers to estimate the monthly cost of a car costing upward of $71,000 as less than America’s lowest-priced car is bogus, says the dealer group.

“We would like the DMV to investigate whether Tesla has violated the law,” said Brian Maas, president of the California New Car Dealers Association. “At the minimum we would hope they would get Tesla to stop issuing advertisements in the form they are currently doing.”

“Tesla fails to provide required information and shatters the notion of comparison finance shopping by including the potential availability of incentives,” said the group in its complaint, as well as “gas savings, and tax savings into final payment quotes for prospective customers.”

The Times also updated its piece with counterpoint views by Rosemary Shahan, president of Consumers for Auto Reliability and Safety in Sacramento.

“They want you to have to go to the dealer where they will mark up your loan, do bait-and-switch financing and engage in all sorts of practices that I am far more concerned about,” said Shahan.

Shahan said also that the dealer group did not estimate a dollar value for which California consumers were being gypped, and said “without seeing any numbers it is hard to say how concerned we should be about Tesla’s advertising.”

Further, Tesla is not unique in the questionable practice of shaving off the full federal tax credit in advertising the net price of an electric car.

Nissan does it with its Leaf, and Chevrolet has essential said as much for its Spark EV for example.

Tesla declined to comment on the allegations.

LA Times