Boston, MA 09/18/2014 (wallstreetpr) – Tesla Motors Inc (NASDAQ:TSLA) managed to successfully take on car dealers in Massachusetts in a lawsuit that attempted to block its direct selling to consumers. That adds to the company’s state-by-state victory as it introduces a new sales concept in the auto market to the chagrin of franchise dealers. Tesla still has a number of market wars to fight and win against car dealers and even manufacturers in some instances.
Tesla claims that its all-electric cars that are powered by battery instead of fossil fuels need to be explained to potential customers, which might be difficult if it uses the traditional auto sales channels. A court in Massachusetts concurred with Tesla on that observation and dismissed a lawsuit brought by franchise car dealers to stop Tesla from practicing direct sales in the state. That development allows the company to sell its cars at shopping malls and other retail outlets.
More market wars
However, Tesla Motors Inc (NASDAQ:TSLA) still has several market wars to fight against car dealers. The company is faced with lawsuits in New Jersey, New York, Ohio, Pennsylvania, Georgia and other U.S. states where franchise car dealers are not happy with its direct sales model.
Benefits of direct sales
The advantage for Tesla Motors Inc (NASDAQ:TSLA) in selling cars directly to consumers goes beyond the ability to explain how their cars work and why the cars are better than the traditional gasoline vehicles or even hybrid ones. The other benefit is that the company is spared the costs of establishing dealer networks. Moreover, the company can keep all profits for itself as it will not share with the dealers.
Tesla Motors Inc (NASDAQ:TSLA) currently has Model S as its flagship all-electric car. It has plans for other car models such as Model X that is expected next year and Model 3 that is expected in 2017, and which is expected to appeal to the mass market at the price of about $35,000.
The company recently struck a deal with state of Nevada to establish its $5 billion Gigafactory there.
