Georgia Dealerships Attack Tesla's Direct Sales Model
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Normally, exceeding sales expectations is a win for companies. Not for Tesla – at least not in Georgia.
Last week, a Georgia auto dealers association filed a complaint with the state's revenue department claiming that Tesla violated state laws with its direct sales model. Tesla's sales-license waiver limits Tesla's sales to 150 vehicles a year. However, the Georgia Automobile Dealers Association alleges that the electric car company has sold 173 Model S sedans so far in 2014, reports the LA Times.
Now, the organization wants to put Tesla out of business – at least in Georgia. As punishment, the auto dealers association has asked the state to revoke existing Tesla dealers' licenses and deny any attempts to renew or reapply for dealer or manufacturing licenses.
Tesla maintains that it has been in full compliance with Georgia laws, reports Bloomberg. Tesla did not immediately respond to Entrepreneur.com's request for comment.
Georgia is just the latest of a long list of states tangling with Tesla on company's direct sales model, including New York, Pennsylvania, Ohio and Missouri. In March, New Jersey banned direct sales of Tesla vehicles, instead forcing all new-car dealers to provide a franchise agreement. Tesla maintains that selling vehicles, instead of relying on franchisees, is essential to the company's business model as customers must be educated about electric vehicles.
Meanwhile, auto franchisees argue that Tesla's model undercuts the franchise model and threatens consumers' ability to utilize dealers as advocates separate from manufacturers. If Tesla is going to sell more than 150 cars a year, say auto dealers, it better start doing it the same way everyone else does – through dealership groups.