Ohio Could Be First of Many Victories for Tesla

Under the agreement, Tesla gets to keep its existing stores in Columbus and Cincinnati and is being allowed to open a third store in Cleveland. The state’s department of motor vehicles issued the two dealer licenses to Tesla because the automaker was not operating a franchise dealership, which is what the state law prohibited.

But that is it for Ohio and Tesla. The company may not open any other stores in the state. And the deal applies only to Tesla; no other carmaker may operate a manufacturer-owned store in the state.

This agreement is a clear win for Tesla, which has been mostly unsuccessful at countering efforts by auto dealership owners to stop the electric vehicle maker from selling cars directly to consumers. Most states have laws that prohibit manufacturers from selling directly, forcing them to go through dealerships.

While this is good news for Tesla, one has to wonder if the deal will hold up to a court challenge from another car maker that might also wish to sell directly to customers without going through a dealership. One Ohio state senator told the Cleveland Plain Dealer, “If it turns out this is a good business model for consumers, we can revisit it.” Presumably to expand manufacturer-owned stores, something that the dealers will no doubt fight all over again.

Tesla shares were down about 0.8% in the first hour of trading Wednesday, at $218.90 in a 52-week range of $37.31 to $265.00.