American electric vehicle giant Tesla has just won a crucial case in Delaware’s Supreme Court, finally allowing the automaker to directly sell EVs in the state.
For context, Tesla was initially prohibited by the law to open a dealership in Delaware, which impeded the automaker’s direct-to-customer sales strategy.
Background of the case
In retrospect, the Delaware Department of Motor Vehicles (DMV) turned down Tesla’s request to open a dealership in the state in 2019.
For those unaware, the Motor Vehicle Franchising Practices Act forbids automakers from owning dealerships, and the agency specified a violation of that law on Tesla’s proposal.
Nonetheless, it allowed Tesla to open a “gallery” at the Christiana Mall and a service center in Newport, provided that no vehicle sales took place there.
The Associated Press further noted that Tesla one again applied for a dealer license in 2020, but failed. After that, Tesla appealed to the Superior Court, but it lost again.
Therefore, Delaware customers can only buy a Tesla vehicle on the automaker’s dealerships in neighboring states or via an online purchase, per Delaware Business Now.
Tesla wins
A Superior Court judge ruled last year that Tesla, as an automaker, was not allowed to sell its electric cars directly to Delaware customers under the Motor Vehicle Franchising Practices Act.
Finally, the Delaware Supreme Court overturned the previous ruling on Monday. It stated that Tesla’s business model is highly different to other car companies.
Below is the court’s decision:
“We reverse the DMV Director’s decision and the Superior Court judgment and remand for further proceedings consistent with this opinion. The General Assembly enacted the Franchise Act to address the disparity in bargaining power which permitted new motor vehicle manufacturers to exert economic pressure over their franchises. Its definitions exclude Tesla and its direct sales model, where new electric cars are not sold through franchised dealers in Delaware.”
See Also:
- Tesla dominates EV market in the USA
- Tesla releases update on battery degradation in its electric models
- Tesla Supercharging network expands by 33% YoY in Q1 2023
- Tesla conducts trials for its new remote test drive strategy
- Tesla is good at winning customers and retaining their brand loyalty
Undoubtedly, the ruling reversal is a huge win for Tesla and to other automakers who intend to open a dealership in Delaware.
