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Tesla fighting for a Delaware dealership

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Tesla has yet to open a dealership in the First State, due to a longstanding law for stop the state’s auto titans from squeezing out small dealerships. | PHOTO COURTESY OF UNSPLASH

Although the sleek sedans marked by the futuristic T logo are increasingly seen traveling Delaware’s roads – even U.S. Sen. Tom Carper is reportedly trading in his trademark minivan for one – it may surprise many that there are no Tesla dealerships in Delaware.

Known for its aggressive approaches to both engineering and business, the electric car giant is now challenging a First State law forbidding any auto manufacturer from operating its own dealer franchises within the state.

While Tesla operates a service station in Wilmington, a support center at Christiana Mall and charging stations throughout New Castle County, the nearest dealerships for potential Delaware customers are in Devon and King of Prussia in Pennsylvania. Many customers also utilize Tesla’s online ordering and curbside delivery services for new vehicles.

In a battle of moves and countermoves, Tesla first applied for a new vehicle dealer license in January 2019 and most recently had its application turned down by the Delaware Department of Transportation on April 19. The Palo Alto, Calif.-based company then initiated a letter-writing campaign by Tesla owners to Gov. John Carney to protest the state’s decision, using its “Engage Tesla” social platform. Tesla also requested a closed-door hearing with DelDOT, as is permitted under law, which is scheduled to take place June 23.

“Based upon the statutory prohibitions contained within 6. Del. C. §4913, and Tesla’s efforts to obtain licensing despite that clear statutory prohibition, the new dealership license application for Tesla is denied pursuant to 21Del. C. §6312 and §6313(4),” Karen A. Carson, chief of the compliance and investigations unit of the DMV, wrote in its April 19 letter.

Most states have, or have had, similar laws to Delaware’s, with most dating back to measures to prohibit early Ford-owned dealerships from competing with independent franchises. In a message posted on its platform as part of its letter-writing campaign, Tesla argued that, “Tesla has never sold through franchised dealers, and our strong interpretation is that we are eligible to sell directly under Delaware law for that reason.”

DelDOT spokesperson C.R. McLeod said the governor has received “roughly two dozen emails in support of Tesla’s application” and has responded to them in language similar to that contained in the rejection letter to the company.

Tesla has been fighting the battle in courts and in legislatures on a state-by-state basis for almost a decade to have its own dealerships, using the twin arguments that existing dealers don’t understand electric cars, and thus don’t know how to sell and service them, as well as contending that, as it has no intention of setting up a network of franchised dealers, it could not be engaging in unfair competition.

A few states have changed their laws to allow Tesla to operate sales and service dealership, while others have allowed Tesla to establish dealerships but limited their numbers. Pennsylvania, for example, is permitting five Tesla dealerships, although it has not yet reached that limit. Maryland and New Jersey each allow four operations.

Another electric car manufacturer, Rivian, is taking a similar stance to Tesla against franchising sales and services of its vehicles and has reportedly committed to establishing 10 dealerships and 41 service facilities nationwide as a first step to launching its operations.

Tesla, as is its policy, did not respond to repeated requests for comment.

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