Virginia Denies Tesla A Store License

It’s getting to be a familiar story even with those who are only mildly paying attention.

In a variation of similar reactions seen also by authorities in other states, Virginia has refused to permit a license first applied for by Tesla Motors in March 2012 to open a retail store in Tysons Corner.

Tesla now has 33 days to file an appeal, or choose what other action it might pursue up to potentially engaging in what could become a lengthy court battle over what it says ought to be a right, but others say is a privilege to which no one is entitled.

Specifically, the question is one of franchise law, which is set up to forbid direct automotive factory operation of retail stores, and mandates middlemen – automobile dealerships – as the means of distributing and servicing cars and trucks.

The law has been adamantly held up as a justifiable tradition by automobile dealers associations on the national and state level around the country, and was upheld again in Virginia on Monday by DMV Commissioner Richard Holcomb.

Speaking to Automotive News, the president of the Virginia Automobile Dealers Association, Don Hall, said he is “very pleased” with the commissioner’s ruling. His organization has strongly opposed Tesla’s attempt to do what auto dealers in Virginia would consider flouting the law.

“We welcome Tesla to Virginia,” wrote Hall to Automotive News, “but they too must abide by the laws like all other manufacturers and Virginia new car and truck dealers.”

Tesla’s options include pursuing an exception to the law but it would have to prove there exists no independent dealer to operate a Tesla franchise in a manner consistent with the public interest.

Commissioner Holcomb said Monday he has seen no clear evidence that a potential independent Tesla dealer is nonexistent, but Tesla is free to appeal in a new hearing with new evidence, if it can present it.

Tesla’s line of reasoning in appealing against similar opposition has centered around the contention that traditional dealers have no inherent incentive to fairly present Tesla’s gas-free cars, as the product stands to undermine their core line of business.

This argument describing a conflict of interest, as presented most recently by CEO Elon Musk in Texas, does holds water with many in sympathy. Tesla supporters have also said by definition a “free market” – something often touted by those who’ve shown themselves to be politically inclined against Tesla – should include exactly what Tesla proposes.

Those who see things Tesla’s way have argued informally that franchise laws are set up like some sort of codified old boys network meant to keep dealers in business despite new Web-based business models that could relegate their services no longer wanted or perceived as needed.

Put bluntly: Allegations of hypocrisy and cronyism against those who on any other day clamor for “free markets” in arguments against taxpayer subsidized businesses like Tesla have often been made by Tesla supporters.

But dealer associations have clung to the law, insisting it is in place for good reasons, and in so many words, and via innuendo, have said Tesla is merely a rebel that needs to learn to tow the line like everyone else.

Their arguments have included that dealers are specialists whose way of business should be preserved, and a strict line between them and manufacturers should be maintained.

Both sides have argued they are attempting to do what is best for the consumer. Both sides have big money riding on the outcome, and both stand to gain or lose themselves, notwithstanding what is best or not for the public.

Tesla has shown itself willing to flex as needed, as it otherwise unyieldingly attempts to go against the tide. It has other ongoing disputes around the country, and dealer associations are generally opposed to what they see as a threat and precedent.

Look for more news within the month on the latest frontline established now in Virginia.