The Palo Alto, California based electric automaker Tesla Motors is preparing a federal lawsuit which if it goes through would prevent certain US states from legally prohibiting direct-to-consumer sales of it’s electric cars. According to Wall Street Journal, Tesla’s legal counsel have been studying the 2013 federal appeals court ruling in New Orleans to remove the direct-sales ban. The ruling determined that St. Joseph Abbey could sell monk-made coffins to customers without having a funeral director’s license. However, the situation surrounding the case remains unclear because it emerged during a casket shortage due to Hurricane Katrina in the US state of Louisiana.
The state had restricted such types of sales to only those licensed by the Louisiana Board of Funeral Directors. But for Tesla there would be a long and uphill struggle to win this battle because the the state courts in the past have upheld laws that required licenses to sell certain products. Despite the fact that there was no clear reasoning behind it other than to protect existing businesses in the same domain.
Which states have imposed the Direct-Sales Ban?
6 American states which have currently prohibited direct-to-consumer sales. These 6 states are: Arizona, Michigan, Texas, Connecticut, West Virginia and Utah. They have imposed a direct-sales ban but represent 18% of United States new-car market. That’s a sizable number and enough to get Tesla to speed up the process.
However, Tesla is smart enough not consider various approaches to help pull this off. The company has been pressuring legislatures in addition to filing dealer applications in these states. As Tesla chief counsel Todd Maron explained, “Tesla is committed to not being foreclosed from operating in the states it desires to operate in, and all options are on the table.” The market share of new-car sales is significant enough for Tesla Motors to consider proceeding with the lawsuit.
The company is just hours away from unveiling it’s newest electric car -Model 3 but said that it’s prepared to argue the case in the federal court and bank upon the coffin case if necessary. It’s aware of the fact that the the current ban is a protectionist move and recently Todd Maron has said in an interview, “Tesla is committed to not being foreclosed from operating in the states it desires to operate in, and all options are on the table.”
Do you think Tesla will win this battle? Let us know in the comments!
We’re only hours away from the unveiling of the newest car and we’ll have a live blog with updates from the event. Stay Tuned!