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Tesla setting path for automakers to sell without dealers in Virginia

Tesla won against the laws which prohibit car companies to sell directly in Virginia. The company still has to receive a license from  Motor Vehicle Dealer Board. However, Virginia DMV Commissioner Richard Holcomb announced that Tesla can now sell without dealerships for three sales locations in Virginia.

Tesla u-turns on store strategy, will keep half of showrooms open… and hike  prices by 3% | TechCrunch

Image credits- Tech Crunch

Tesla selling directly goes against the Virginia Automobiles Dealers association though Tesla won the battle legally. The decision by Holcomb to grant permission was because of public opinion on the matter.  Many people expressed their support in certain regions, supporting Tesla in the regions- Arlington, Norfolk, and Charlottesville. Holcomb wrote,  “Much of that support revolves around the fact that Tesla’s business model is unique and outside the traditional model of motor vehicle dealerships in Virginia,”

The decision also included- if Tesla were precluded from opening the stores, “prospective and existing Tesla customers would need to travel great distances to the stores located in Fairfax or Richmond … or Raleigh, N.C. Traveling such distances is certainly not in the interest of the retail motor vehicle buyer.”

Furious Virginia Automobile Dealers Association

Despite Tesla defeating them legally, local automobile dealers are not happy about the defeat. Privously many automakers tried to sell independently, however the Virigina  Dealers Association opposed to the idea and successfully never allowed any company to sell separately.

The group didn’t formally oppose Tesla. After hearing Holcomb’s final decision, the organization’s president and CEO Don Hall spoke about not agreeing with this decision. As stated by Hall, “The decision frankly was not in compliance with the laws of Virginia. It was an easy way out. I don’t believe the DMV in any way, shape or form carried out its responsibility.”

Unlike in the past, the association plans to make sure dealers compete with Tesla. They are confident that in coming years various models will be introduced by automakers. Hall said, “I would say to Mr. Musk and Tesla, enjoy the short ride, because the standard OEMS [auto manufacturers] are coming with electric vehicles, and lots of them are available, and the franchise system that exists today will outsell Tesla by a wide margin,”

State laws in Virgina state that car dealers should sell through dealerships. Which includes an exception on unexpected cases like there is no dealership available based on “public interest”. Tesla already has two showrooms in the state. It was granted in 2016 in the pretence that they have same prices as online. The Tyson’s Corner showroom was granted the license. Tesla is well aware of the challenges to sell without dealerships. They have battled legally in multiple locations like New Arizona, Lousiana and Connecticut.

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