Tesla Allowed to Sell Cars in Massachusetts Without Normal Dealerships

Sep 16, 2014 09:55 AM EDT | Matt Mercuro

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A lawsuit looking to block Tesla Motors from selling its electric vehicles directly to consumers in Massachusetts was thrown out by the state's highest court on Monday, allowing it to bypass normal dealerships.

Massachusetts Supreme Judicial Court unanimously ruled that the State's Automobile Dealers Association and two dealers lacked standing to block direct Tesla sales under a state law created to protect franchise owners from "abuses by car manufacturers," according to Reuters.

Justice Margot Botsford wrote that the law was created to protect dealers from unfair practices of manufacturers and distributors "with which they are associated, generally in a franchise relationship," instead of unaffiliated manufacturers.

The law "was intended and understood only to prohibit manufacturer-owned dealerships when, unlike Tesla, the manufacturer already had an affiliated dealer or dealers in Massachusetts," Botsford wrote.

"Contrary to the plaintiffs' assertion, the type of competitive injury they describe between unaffiliated entities is not within the statute's area of concern," she added, according to Reuters.

The trade group accused the Model S maker of operating a showroom in in Natick, Massachusetts without a license and in violation of a law prohibiting a manufacturer from owning a dealership.

"We're disappointed," Robert O'Koniewski, a spokesman for the group, said of the ruling, according to Reuters. He added that the group plans on reviewing what steps to take with state legislators to address "the standing gap."

Todd Maron, deputy general counsel at Tesla, said the company is pleased with Monday's decision.

"It's a great decision," Maron said, according to Reuters. "The statute is very similar to statutes in other states. We have battles in New Jersey and other states with similar constructs, and we hope and expect the same interpretation would carry over to those venues."

New Jersey's Motor Vehicle Commission revoked Tesla's license to operate two stores back in March. Three months later, The General Assembly passed legislation that would allow sales to resume, if enacted into law.

Tesla also cannot conduct direct sales in Arizona, Maryland and Texas.

Earlier this month, Nevada let Tesla make direct car sales to residents as part of its arrangement to provide $1.3 billion of tax breaks for the company to build a giant battery factory.

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