The Missouri Auto Dealers Association is suing the Missouri Department of Revenue and its director, Nia Ray, for allowing electric-car maker Tesla to sell vehicles directly to consumers.
In the lawsuit filed Thursday in Cole County Circuit Court, the Missouri Auto Dealers Association, or MADA, alleges the revenue department issued a dealers license to Tesla to sell vehicles in Missouri in violation of state law.
Tesla, the Palo Alto, Calif.-based maker of electric vehicles that was founded in 2003, does not sell its cars through traditional franchised dealerships. Rather, the company, led by billionaire CEO Elon Musk, sells vehicles from company-owned stores and over the Internet.
Tesla in University City in June 2013 after it was issued a dealer license by the revenue department in the spring of 2013. Tesla has since added multiple charging stations locally, including at the Four Seasons and Magnolia Hotel 51黑料聽downtown.
People are also reading…
Telsa also opened a store in Kansas City last month. Its entry-level Model S starts at $69,900.
There are nearly 200 Model S cars in Missouri, according to Tesla.
MADA, which represents 381 franchise car dealers, maintains that state law requires manufacturers to sell motor vehicles through a dealer holding a valid franchise agreement with the manufacturer.
The revenue department and Ray 鈥渉ave created a non-level playing field where one entity 鈥 Tesla 鈥 is subject to preferential treatment and all bona fide dealers are discriminated against,鈥 the lawsuit states. Reuther Ford, a dealership in Herculaneum, and Osage Industries, an ambulance manufacturer based in Osage County, joined the MADA as plaintiffs.
Last year, an in the Missouri Legislature sought to end direct-to-consumer sales by Tesla, but the amendment was ultimately pulled from the bill.
Michelle Gleba, the revenue department鈥檚 spokeswoman, said the department does not comment on pending litigation.
Last year, the department鈥檚 acting director, John Mollenkamp, said in a statement that automakers that have existing franchise agreements with dealers are barred from competing directly with them, however the law does not apply to companies that never had such agreements.
A Tesla spokesman made the same argument Thursday.
鈥淭he 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,鈥 Diarmuid O鈥機onnell, Tesla鈥檚 vice president of corporate and business development, said in a statement.
But Lowell Pearson, MADA鈥檚 attorney and a former revenue department deputy director, said the state has, in effect, created 鈥渁n exception for a new entrant in the business.鈥
鈥淚t disadvantages hundreds of Missouri car dealers who have been doing business for many, many years,鈥 he said.
Pearson said the MADA is asking the Circuit Court to bar the revenue department from renewing Tesla鈥檚 license for the University City location and bar it from receiving other dealer licenses elsewhere in the state.
鈥淚t鈥檚 quite well established that a car manufacturer cannot sell vehicles directly to the public and they must be sold through a licensed dealer,鈥 Pearson continued. The revenue department 鈥渃hose not to enforce that law for Tesla.鈥
Opponents of Tesla鈥檚 business model in other states have argued that it runs afoul of state laws that prohibit direct sales of motor vehicles by manufacturers. In September, Tesla prevailed in a lawsuit brought by an auto dealers group in Massachusetts after the state鈥檚 highest court ruled the group lacked standing to sue.
In Missouri, the MADA maintains that Tesla鈥檚 direct-to-consumer model harms dealers whose business depends on the state requiring all manufacturers to comply equally with state law. Some states, including Texas and Arizona, bar Tesla from selling cars directly to customers.
鈥淲e feel it鈥檚 a violation of the law,鈥 MADA鈥檚 president and CEO, Doug Smith, said in a conference call with reporters last week, describing Tesla鈥檚 business model. 鈥淭he law ... clearly states that a manufacturer cannot sell vehicles to consumers.鈥
Smith said his group鈥檚 opposition is not with Tesla, but how it sells cars.
鈥淲e鈥檇 love to see Teslas all over the road,鈥 he said. 鈥淲e鈥檇 just like them to sell through dealerships like any other (manufacturer).鈥
Tesla鈥檚 O鈥機onnell said the dealers simply are looking to limit consumers鈥 ability to choose.
鈥淭he 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,鈥 he said.
