Tesla Causes Trouble in Missouri Over Direct Sales Tactic

Jan 25, 2015 04:00 PM EST | Matt Mercuro

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The Missouri Auto Dealers Association is suing the Missouri Department of Revenue and its director, Nia Ray, for letting Tesla sell vehicles directly to consumers in state.

The lawsuit was filed this week in Cole Country Circuit Court, according to the St. Louis Post-Dispatch.

The Missouri Auto Dealers Association, or MADA, claims the revenue department broke state law when it issued a dealers license to the Palo Alto, California-based automaker to sell vehicles in Missouri.

Tesla, which was founded in 2003, does not sell its cars through a normal franchised dealership. Instead, the EV company, run by CEO and co-founder Elon Musk, sells cars from company-owned stores and over the internet.

There are almost 200 Model S vehicles in Missouri, according to Tesla.

MASA represents 381 franchise car dealers and maintains that state law requires a manufacturer to sell vehicles through a dealer holding a valid franchise agreement with the manufacturer.

Tesla opened a $2 million service center in University City, MO, in 2013 after it was issued a dealer license by the revenue department. Since then, the automaker has added a number of charging stations and a brand new store in Kansas City, MO, back in December.

MADA claims that letting Musk and his company sell cars without a proper dealer, the revenue department and director Nia Ray have "created a non-level playing field were one entity - Tesla - is subject to preferential tremens and all bona fide dealers are discriminated against," according to the St. Louis Post-Dispatch.

MADA's attorney and former revenue department deputy director, Lowell Pearson, said that Missouri "disadvantages hundreds of Missouri car dealers who have been doing business for many, many years."

He added that the group is asking the court to ban the revenue department from renewing Tesla's license for the University City location and from receiving other dealer licenses in other places around the state.

"It's quite well established that a car manufacturer cannot sell vehicles directly to the public and they must be sold through a licensed dealer," Pearson said to the Post Dispatch.

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