Judge says dealers can sue over Tesla's second Virginia store

A circuit judge in Virginia has allowed the state’s auto dealers group to proceed with an appeal that challenges the state’s approval for Tesla Inc. to open a second dealership in the state.
Tesla faces ongoing legal battles across the country over selling its cars online and through its own stores, not through franchised dealerships.
Virginia Circuit Judge Gregory Rupe, in a ruling filed Monday, approved the request of the Virginia Automobile Dealers Association to appeal the state’s decision, filed in 2016 by Richard Holcomb, Virginia Department of Motor Vehicles Commissioner. The judge said he would allow the suit to proceed, citing Virginia’s 452 car dealers as the “aggrieved party,” and said the association has legal standing to file its suit.
Rupe’s ruling also would allow the association to introduce two Virginia dealers as key witnesses in the case, which was previously prevented, according to Michael Charapp, an attorney representing the association in the case.
“We want Tesla to operate on the same basis of every other dealer in the state,” Charapp said. “Dealers understand how to serve their customers and protect their employees.”
In a statement emailed to Automotive News on Thursday, Tesla said it was “disappointed” by the court’s decision, but added the company will “remain fully committed to doing business in Virginia and serving the public interest in sustainable energy better than any franchise auto dealer could.”
‘Experimental’ store
Tesla won permission in November to open the second retail store in Virginia after Holcomb found that no dealers were equipped to sell the vehicles.
Charapp countered that at least 11 dealerships in Virginia are interested in selling Tesla vehicles.
Tesla’s first Virginia dealership, at Tysons Corner-Tyco Road in Vienna, Va., opened in 2015 as a 30-month “experimental” store, which is expected to near the end of its permit soon. The company also has a gallery location, which shows cars but can’t sell them, in McLean, Va.
Car dealers in Virginia and across the country see Tesla’s direct-to-consumers sales model as a danger to the franchise system, which they say protects consumers.
“There are reports that Tesla’s inventories are building up and they’re in massive price cutting campaign,” Charapp said. “Where does that leave customers who paid the full price before that because they thought they had to?”
The ruling won’t halt the opening of the store, where Tesla could start selling cars as soon as August. But it does allow the legal battle to continue. If Tesla loses, the automaker would then be forced to shut down the Richmond dealership.
“We are very confident that we’re going to win our appeal,” Charapp said. “The judge ignored the statute and all previous precedents.”
Tesla has argued that dealers, who are trained for quick sales, cost markups and money-making repair work, could not modify their practices for its cars. With new, highly complex technology, the EVs require more time-consuming sales. And with fewer moving parts, there’s little room for profit from service — a source of revenue for many traditional dealers.
Fuente: Automotive News