After opening several stores without much pushback, Elon Musk's ambition to replicate the Apple experience in Tesla factory stores is now facing potential roadblocks.
Dealer associations in a handful of states, and state regulators in at least one case, say Tesla's stores violate state franchise laws that prohibit factory ownership of dealerships. Electric-vehicle maker Tesla now operates 17 stores in 10 states and the District of Columbia, most in shopping malls. Another six are scheduled to open this fall.
The protesting dealer associations say Tesla's factory-owned stores present unfair competition for rival dealerships, are inconvenient for consumers needing repairs and, if left unchallenged, ultimately threaten the franchise system.
"If a manufacturer sees that Tesla is successful with this kind of business model, who's to say they don't break out their own EV product lines and create a separate system that bypasses dealers?" said Bob O'Koniewski, executive vice president of the Massachusetts State Automobile Dealers Association. "It's extremely problematic."