That is ridiculous. A car is a product like any other product that can be sold. Apple sells phones and MacBooks directly to the public. Outlet malls have clothing manufacturers selling directly to the public. The car dealerships is an outdated model and this is a sign that they are desperate. They are just suing because once the Tesla stores prove to be more efficient other car manufacturers will follow suit.

Every now and then we see old laws being used by dying industries take a plunge at stopping innovation. Uber & Air B'n'B are two others that come to mind.

The bigger problem for the dying industries is that they're taking on companies that at their core solve problems and disrupt. As opposed to being pathetic and continuing to prolonge the inevitable, they should focus their efforts on product development/sales channels. Or maybe even become a little innovative themselves.

It is basically the same type of law that kept studios from owning movie theaters. Separating producers from local sales was a big thing. We can say it is a crap law but there were some very real worries and reasons that lead to it in many industries. Expect if the law is overturned that all the manufactures will replace local dealers with their own showrooms. This isn't about stopping innovation, it's about accumulated history.

"Tesla is choosing to ignore the law and then is choosing to play outside that system."

Is there a statement more indicative of the fear of innovation in archaic industries?

Let's hope that laws like this begin to vanish and clear the way for innovation.

If they don't, I'm sure Mr. Musk will find a workaround. They could essentially setup their retailing operation as a separate legal entity and work around this.

And that's what big auto needs to understand - legal ploys to stop progress will only be met with more legal maneuvers. How about cessation of belly aching and movement toward a change in the product and retail model?

The NPR story doesn't seem correct, at least according to my understanding that Tesla show room locations do not sell cars, only provide information about them. A car dealership is a business/location that sells cars, and Elon's argument is that a Telsa store does not sell cars and is therefore not a dealership. Sounds like defensible logic against the franchise lobby-law to me, but according to the NPR story a Tesla store sold a car. The law is ridiculous, but it is still the law.

According to the story: Mark Seegar claimed, "he walked past Tesla Motors' Bellevue, Wash., showroom. It's one of a handful of Tesla's company-owned stores. Within five minutes, he'd put down a deposit for an electric car that costs more than $50,000."

Tesla's site: "As it is, our Product Specialists could not sell you a car today under any circumstances, as Model S is already sold out several months in advance and there is no inventory on site. All they can do is get you to consider placing a reservation." http://www.teslamotors.com/blog/tesla-approach-distributing-...

From the Massachusetts law:

(c) It shall be deemed a violation of subsection (a) of section 3 for a manufacturer, distributor or franchisor representative:

...

(10) to own or operate, either directly or indirectly through any subsidiary, parent company or firm, a motor vehicle dealership located in the commonwealth of the same line make as any of the vehicles manufactured, assembled or distributed by the manufacturer or distributor.

http://www.malegislature.gov/Laws/GeneralLaws/PartI/TitleXV/...

This just sounds like desperate clawing of a doomed business model to me.

These bullshit laws need to be updated. Its no different than someone making anything and then being unable to sell it themselves.

This law is sure to go away. The fact is that the future of car sales is the internet.

Here is an excerpt from my blog: "According to a Polk and Autotrader.com study, 70% of new and used car buyers use the internet while shopping for their vehicle, with 58% of all buyers listing the internet as the most influential element in their car buying process. But the online car buying process doesn’t stop there. In fact, eBay Motors has sold 4.62 million passenger vehicles solely online since its inception."

See the post here:http://salemove.com/buying-a-car-on-the-internet/

What a dumb law. I wish I had a dollar for everytime the government tried to stop progress to protect big, archaic businesses (über, sidecar, lyft, Airbnb, you're with me on this one). Anyone smell corruption brewing?

Think about it. How can a government own a car company then legislate against other car companies? I know it's federal gov buying and local gov ruling in this example, but it's a slippery slope nonetheless. It would be like mark Cuban becoming the commissioner of the NBA while still the owner of the mavs. Anyone here think that would end well?

I think such laws are about to go away after big players like BMW start selling their cars directly to customers online:

http://www.bloomberg.com/news/2012-07-24/bmw-bets-mouse-clic...

As a Swede I'm always amazed to hear about this type of US laws. I know Sweden represents socialism to Americans, but when it comes to this kind of intervention in the market it's much less accepted here than in the US.

"First they ignore you, then they laugh at you, then they fight you, then you win.". Looks like victory is pretty close.

Did the horse-and-buggy dealers sue the automobile industry when it was starting to threaten them, too?

I love it. Tackling both the electric car and dealership problem at the same time. This is what disruption looks like.

Car sales has always struck me as an industry that was ripe for disruption. Why do we still need car salesmen?

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I'm curious to know what other consumer products are sold through dealerships (In the continental US). Why would any law make it mandatory for a manufacturer to sell their items through a dealership. Just curious.

"FREE Butterball Turkey Certificate with every test drive!"

I got this ad in the mail today from a local Jeep dealer. Dealers clearly have no clue. Could you ever imagine Tesla thinking up such a dumb promotion?

How can such a law be anything but bad for an economy?

I think it's a sure sign you're on to something when the incumbent businesses try to use outdated laws to stop you.

Any bets on how this is going to play out?