--- title: "Tesla Motors Faces Lawsuits: Company Fights Dealer Associations" id: "13981" type: "post" slug: "tesla-motors-faces-lawsuits-company-fights-dealer-associations" published_at: "2012-10-23T17:30:13+00:00" modified_at: "2026-11-09T19:21:53+00:00" url: "https://associationsnow.com/2012/10/23/tesla-motors-faces-lawsuits-company-fights-dealer-associations/" markdown_url: "https://associationsnow.com/2012/10/23/tesla-motors-faces-lawsuits-company-fights-dealer-associations.md" excerpt: "As Tesla Motors faces lawsuits from two dealers’ groups, the electric car company’s CEO, Elon Musk, defends his company’s business model." taxonomy_category: - "Advocacy" taxonomy_post_tag: - "AssociationsNow" - "Business" - "Dealerships" - "lawsuits" - "Tesla" taxonomy_content_format: - "Article" taxonomy_role: - "Association CEO / Executive Director" - "C-Level" - "Executive Team" - "For-Profit CEO / President / Owner / Partner" taxonomy_persona: - "Executive Leadership" --- [Home](https://associationsnow.com/) » [Articles](https://associationsnow.com/format/article/) » Tesla Motors Faces Lawsuits: Company Fights Dealer Associations Tesla Motors CEO Elon Musk has built a reputation for disrupting industries. But has he met his match with car dealers? Weeks after numerous [dealers’ associations blasted (opens in a new tab)](http://associationsnow.com/2012/10/tesla-motors-frustrates-dealers-with-factory-owned-stores/) the electric car company’s Apple-store-like model, now Tesla Motors faces lawsuits brought by auto dealer associations in New York and Massachusetts and some of their members, claiming that its stores violate state franchise laws. Tesla avoids calling its stores franchises. > They claim they’re operating under the guise of a nonsales showroom, and we call that out as an outright scam. In a blog post Monday, Musk [directly addressed the controversy (opens in a new tab)](http://www.teslamotors.com/blog/tesla-approach-distributing-and-servicing-cars) , saying his company stood at a disadvantage under the dealer system and that it was not hurting current franchisees by selling directly to consumers: “Automotive franchise laws were put in place decades ago to prevent a manufacturer from unfairly opening stores in direct competition with an existing franchise dealer that had already invested time, money, and effort to open and promote their business,” he wrote. “That would, of course, be wrong, but Tesla does not have this issue. We have granted no franchises anywhere in the world that will be harmed by us opening stores.” Musk claims that the plaintiffs in the lawsuits have their own interests in mind: He says that one dealer is upset that Tesla Motors will not grant it a franchise and another is selling a competing electric vehicle brand, [Fisker (opens in a new tab)](http://onward.fiskerautomotive.com/en-us) . “They will have considerable difficulty explaining to the court why Tesla opening a store in Boston is somehow contrary to the best interests of fair commerce or the public,” he claims. Associations, however, aren’t buying that argument. “They claim they’re operating under the guise of a nonsales showroom, and we call that out as an outright scam,” Robert O’Koniewski, executive vice president of the Massachusetts State Automobile Dealers, [told AutoNews (opens in a new tab)](http://www.autonews.com/apps/pbcs.dll/article?AID=/20121022/RETAIL07/310229808/dealers-sue-tesla-in-mass-n-y) . His group sued Tesla Motors October 16 in an effort to shut down the company’s suburban Boston store. Tesla could face an uphill battle against the groups, which have successfully [prevented Ford and General Motors (opens in a new tab)](http://blogs.wsj.com/corporate-intelligence/2012/10/22/tesla-ceo-elon-musk-takes-on-car-dealers/) from opening similar factory-owned stores in the past 20 years. And as AllThingsD points out, another Silicon Valley startup, TrueCar, [effectively retreated from its model (opens in a new tab)](http://allthingsd.com/20121021/truecar-ceo-disrupting-the-car-buying-process-nearly-drove-it-out-of-business-video/?KEYWORDS=cars) after dealers’ groups complained to regulators. Will Tesla Motors will be able to continue selling without involving dealerships? Let us know what you think in the comments. (photo by Wesley Fryer/Flickr) [Ernie Smith](https://associationsnow.com/author/ernie-smith/) Ernie Smith is a former senior editor for Associations Now. [More articles by this author](https://associationsnow.com/author/ernie-smith/) Tags: [#Business](https://associationsnow.com/tag/business/) [#Dealerships](https://associationsnow.com/tag/dealerships/) [#lawsuits](https://associationsnow.com/tag/lawsuits/) [#Tesla](https://associationsnow.com/tag/tesla/) **Stay Informed** [Subscribe to our free newsletter](https://associationsnow.com/newsletter/) , *Associations Now Daily News*, to find out what’s happening in the association world every business day. ## You Might Like - [VideoThe Career Moves Every Association Leader Needs Right NowSeptember 24, 2026](https://associationsnow.com/2026/09/24/the-career-moves-every-association-leader-needs-right-now/) - [VideoUrban Land Institute- Project Recovery: Rebuilding Los Angeles After the January 2025 WildfiresSeptember 24, 2026](https://associationsnow.com/2026/09/24/urban-land-institute-project-recovery-rebuilding-los-angeles-after-the-january-2025-wildfires/) - [VideoNCRA: Safeguarding Cancer Surveillance: An Advocacy Response to FY26 Budget ThreatsSeptember 24, 2026](https://associationsnow.com/2026/09/24/ncra-safeguarding-cancer-surveillance-an-advocacy-response-to-fy26-budget-threats/) - [VideoASAE Legislative Summit 2026March 26, 2026](https://associationsnow.com/2026/03/26/asae-legislative-summit-2026/) ## Comments **Comments are for ASAE members.** [Learn more about comments on this site.](https://associationsnow.com/comments/) [Log in](https://associationsnow.com/login?redirect_to=https%3A%2F%2Fassociationsnow.com%2F2012%2F10%2F23%2Ftesla-motors-faces-lawsuits-company-fights-dealer-associations%2F%23comments) to your member account or [join ASAE](https://my.asaecenter.org/select-a-membership-type/) !