Tesla Facing Sales License Legislation in Missouri

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We can add Missouri to the growing list of states wrangling with legislation that would inhibit Tesla’s ability to operate using its direct-to-consumer model. Tesla Motors addressed Missouri’s recent bill, which came to light much in the way New Jersey’s own anti-Tesla legislation played out.

On its company blog, Tesla contends that the auto dealers lobby attempted a “sneak attack to thwart due process and hurt consumer freedom,” by introducing new language to a previously existing bill. The original bill concerned laws about all-terrain, utility, and off-road recreation vehicles, but Tesla claims that the “last-minute” addition of certain language was never discussed publicly before the bill passed the Missouri Senate and headed back to the House.

As it stands now, Tesla is technically not in violation of the existing regulations which prohibit a franchisor from selling directly to customers. Because Tesla does not franchise its sales centers at all, it does not consider itself a franchisor (it has no franchisees). The bill’s new language specifies that the limitation now refers also to, “any manufacturer of new motor vehicles which establishes any business location or facility within the state of Missouri.”

The original franchise laws, which exist in numerous states, were intended to protect the consumer from unreasonable price gouging on the part of the manufacturer. Tesla is accusing Missouri of economic protectionism that would essentially create a monopoly for franchised dealerships at the detriment of consumers.

As we saw previously in New Jersey, Missouri legislators would effectively require all new vehicles be sold at a franchised location. Tesla appealed the decision in New Jersey which banned its direct-to-customer sales model, so we expect Elon Musk and his company to do whatever they can to fight this new law before it passes the House. Tesla has one store in St. Louis that employs 15 people, while a service center is planned for Kansas City which would add as many employees.

Outright bans are already in place in Arizona, Colorado, Texas, and Virginia. Previously, Tesla was able to reach compromises to continue business operations in Ohio and New York.

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