Tesla was victorious in Delaware Supreme Court this week, paving the way for themselves and other electric vehicle (EV) automakers to sell directly to consumers in the state. Tesla had appealed a decision by the Superior Court which had ruled Tesla was not allowed to open a dealership and sell cars to customers in Delaware unless it was franchised.
As surprising as it is Tesla is still not allowed to employ their direct to consumer sales strategy in several states across the US. Part of the reason for this is the strong auto dealership lobby groups, like in Connecticut for example, which has been able to persuade lawmakers to still ban direct sales despite repeated attempts over the years to overturn the legislation. Even in Texas, Tesla’s home state in which it has spent billions of dollar to build a Gigafactory, the automaker is still not allowed to sell directly to consumers.
It was the same in Delaware, where the state’s Department of Motor Vehicles (DMV) denied Tesla the right to own its own dealership. That decision was upheld by the Superior Court, but Tesla would not give up, appealing that decision to the Delaware Supreme Court, which ruled in favour of Tesla this week. In its ruling, the court justices said the existing law expressly excludes Tesla and its direct sales model from its definition, and as such is allowed to sell to consumers in Delaware.
“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,” the decision reads. (via Delaware Business Now)
The justices also cited similar rulings from other states that overturned their franchise laws to allow direct to consumer sales. While Tesla appealed the decision, other EV automakers that also employ a direct to consumer sales model, like Rivian and Lucid, will also now be able to set up shop in Delaware.
You can read the full decision below.
