Tesla Wins Partial Victory in Missouri Auto Dealers’ Association v. Tesla
In 2015 Tesla opened 3 dealerships in Missouri. Two in University City and One in Kanas City. On December 31, 2016, Tesla’s license to sell cars in Missouri expired.
The Missouri Auto Dealers’ Association (MADA)a lobbying organization for car dealerships filed suit against the Missouri Revenue Department in January 2015 claiming that Tesla’s sales model violated state law. The suits objective is to block the revenue department from granting Tesla a new license after the existing license expires in 2017.
Most auto builders (40 in all) sell their vehicles through independently owned dealerships. Tesla sells directly to consumers eliminating the middleman. Attorney Lowell Pearson argued on behalf of MADA that Tesla’s direct sells practices were illegal under Missouri Law. Tesla has faced and faces the same challenge in other states. An identical case is pending in Michigan.
Judge Daniel Green a Circuit Court Judge for Cole County MO. sided with the MADA. In August of 2016, the judge found that Tesla’s practice of not selling vehicles through state-licensed franchises was illegal. All three of the Tesla dealerships in Missouri were closed after Judge Green denied Tesla’s request for a stay that would allow them to continue operating until the company’s appeal could be adjudicated.
In the Missouri Court of Appeals, lawyers for the automaker argued that not granting a stay would work a hardship on Tesla employees and customers in Missouri. The court sided with the company. Tesla will continue operating in Missouri until the case can be settled.