Judge Concludes That Tesla Was ‘Selling’ Out of Greenwich Gallery
NEW BRITAIN, CT — (Updated 4 p.m.) Despite claims to the contrary, Superior Court Judge Joseph Shortall agreed with the state Department of Motor Vehicles that Tesla was illegally selling its cars out of its Greenwich gallery.
The electric car maker sued the DMV in June 2017 after the department reached the same conclusion regarding the sale of vehicles without a dealer license. The DMV took up a complaint filed by the Connecticut Automotive Retailers Association (CARA), which represents car dealerships in Connecticut.
Connecticut state law prohibits the direct sale of vehicles to consumers by manufacturers. It currently requires sales through a franchise dealership license.
Tesla doesn’t believe its gallery activities require such a license.
In court documents, Tesla maintained that it “does no more at the gallery than display example vehicles, educate consumers about them and promote their benefits, and explain how consumers may lawfully purchase them online or at licensed Tesla stores in other states.”
Through a spokesperson the company said they disagree with the decision.
“Tesla disagrees with the judge’s decision, and we stand by our mission to educate the public and raise awareness about the benefits of EVs because getting more EVs on the road is the right thing to do for the environment and for the battle against climate change,” a Tesla spokesperson said in an emailed statement.
But the court concluded more than education was happening at the Greenwich location.
“Because Tesla engages in the business of selling motor vehicles and offering them for sale at the Gallery without the required license to do so, its activities there are illegal,” Shortall wrote.
He said the electric car maker goes beyond constitutional free speech claims.
“Tesla travels far beyond the boundaries of constitutionally protected commercial speech when its employees arrange for test drives of the same type of vehicles as are on display at the Gallery, assist Gallery visitors in configuring the vehicle they wish to buy on a computer terminal in the Gallery and saving it to the Tesla website as ‘My Tesla,’ available for later purchase, and/or searching the Tesla inventory of vehicles already manufactured and available for purchase,” Shortall wrote.
Shortall said Tesla has other means of promoting the purchase of their vehicles to Connecticut consumers through advertising.
Despite not being able sell in Connecticut, there were about 1,600 Tesla vehicles registered in the state this past spring and 3,000 orders have been placed by Connecticut residents for the Model 3, a company spokesperson has said.
Tesla had been allowed to continue operating in Greenwich while the lawsuit was pending.
It’s unclear if the Palo Alto, California company will appeal the decision or if the Connecticut’s General Assembly will step in and change the law to allow Tesla to sell directly to consumers.
The legislature has taken up the issue four years in a row, but the proposal has fallen short each time.
Jim Fleming, president of the Connecticut Automotive Retailers Association, has successfully argued against an exemption for Tesla.
Fleming has said there are more than 270 new car dealerships in Connecticut that employ 14,397 residents, and there are 44 types of electric vehicles being sold by Connecticut franchise dealerships.
He has said Tesla should play by the same rules.
Last year, Jonathan Chang, vice president of legal affairs for Tesla, testified that they have opened stores in 24 states without using franchise dealerships.
“It’s an important part of our message to sell direct,” Chang said.
He said electric vehicles are still about 1 percent of the market.
The dealers and Tesla have been unable to reach an agreement to co-exist.