The Connecticut Supreme Court is scheduled to take up the case of whether Tesla should have been allowed to operate stores in the state.
It’s a case that could help shape a brewing national debate about how consumers buy electric cars, whether current dealers are equipped to sell them, and whether new startup automakers should be subject to laws governing existing franchised dealers,
Connecticut, along with Texas, Michigan, and Virginia, has become a key battleground in the skirmish between Tesla and state dealer groups who argue that the company cannot sell cars in their states and lobby to tighten state franchise laws to forbid it.
At issue is a Tesla “gallery,” in Greenwich, Connecticut, where the company says it displayed its cars and provides information about them and about electric cars, and directed visitors to its website where they can order the cars, or to stores in nearby New York where they can buy them. The Greenwich gallery was closed in March in a round of cost cutting at the company.
2018 Tesla Model S and 2018 Tesla Model X
In 2016, the Connecticut Automotive Retailers Association filed a complaint with the state’s DMV, alleging that the activities Tesla conducted at its gallery were substantially the same as that of a traditional car dealership. In 2017, the DMV agreed, though it allowed Tesla to keep its Greenwich gallery opened while it appealed the ruling.
An appellate court sided with Tesla, and CARA appealed to the state Supreme Court. That is the case the court is now taking up.
Tesla argues that traditional dealerships, who make most of their money on service and on used cars, lack an interest in selling electric cars that could eat into their later service business. In a letter to state lawmakers at the time, then-Tesla spokesman Diarmid McConnell said the state should allow Tesla to sell direct to customers so that “Connecticut consumers would finally have the freedom to buy the products that they want, and Tesla could create the jobs, business and improvements to sustainable transportation in the state that it wants.”
In some states that forbid Tesla stores, company galleries are not allowed even to mention the company’s website, in others, Tesla galleries can’t deliver cars. Unlike Greenwich, however, many other galleries don’t have another location a few miles away over a state line where Tesla can sell cars.
While the court decision may be moot for Tesla, given its decision in February to cut back on its stores and focus on online sales, it and similar ones in other states could have wide implications for other new electric carmakers such as Rivian, Lucid, and Nio, planning to sell cars in the U.S.
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