Tesla Accused Of Operating Illegal Showrooms In Four States

October 12, 2012 7:00 AM

Tesla Accused Of Operating Illegal Showrooms In Four States

" Given today’s high gas prices, many car shoppers are turning their attention to hybrids and other fuel-efficient vehicles. Electric cars like those built by Tesla [NASDQ:TSLA] could be attractive to better-off buyers, but Tesla is facing some legal problems that may slow the selling process.

Automotive News reports that dealer networks and government regulators across the U.S. have begun to question Tesla’s sales techniques. And in several cases, they’ve threatened legal action to stop the start-up.

A new paradigm for auto sales

According to the National Automobile Dealers Association, 48 states have franchise laws that forbid or restrict the ability of automakers to sell vehicles directly to the public. That’s why dealerships tend to be independently owned and operated. Tesla showrooms, on the other hand, are owned by Tesla itself.

However, Tesla says that the majority of its showrooms — designed by George Blankenship, the man behind Apple’s outrageously successful chain of retail shops — don’t actually conduct sales; they simply share information about Tesla vehicles. When it’s time to seal the deal, Tesla staff point prospective shoppers to the automaker’s website, where they can customize and reserve their vehicle "

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