Iowa gives Tesla the red light on direct sales

Sat, Sep 27 2014

The Iowa Department of Transportation was recently tipped off that Tesla Motors was offering test drives in the state. This led to the state DoT shutting down those test drives in West Des Moines earlier this month, according to USA Today. Tesla reps said that the company was just trying to offer test drives and wasn't actually trying to sell cars, but that argument didn't fly.

The issue is that Tesla is neither licensed as an auto dealer nor is allowed to sell its vehicles directly to customers because of franchised dealership laws. Iowa stands among states like Texas, Arizona, New Jersey and Maryland in its position that a third-party franchised dealership is legally required for car sales. Recently, Georgia said it may revoke Tesla's dealer license because of opposition from the Georgia Automobile Dealers Association. On the flipside, Tesla won a recent legal victory in Massachusetts.

Oh, and the tip to the Iowa Dot? It came from the Iowa Automobile Dealers Association.

By Danny King