In the continuing battle between Tesla, which wants to sell cars directly to consumers, and car dealers, who are using state laws to keep the EV startup from opening factory outlets, the California New Car Dealers Association has asked that state’s DMV to “investigate and remedy several egregious violations and advertising and consumer protection laws” by Tesla.
The dealers say that Tesla advertising that includes “packed external savings” like fuel costs, incentives and federal tax credits, in calculating the cost of ownership is misleading. For example, the dealer group says that the available $7,500 U.S. federal tax credit should not be included in Tesla’s advertising since only 20% of taxpayers pay enough taxes to qualify for the tax credit.
The CNCDA membership is comprised of 1,100 franchised new-car and -truck dealerships in California, which is the largest individual state or provincial market in North America. In an interview, Brian Maas, president of the dealer association said, “We don’t have any quibble with Tesla’s ability to sell cars, it’s how they are selling cars that is the problem.” Tesla declined to comment on the suggested investigation.
Tesla has run into problems trying to sell cars directly to consumers in Texas and New York but California law permits car manufacturer direct sales as long as they follow advertising guidelines and other consumer protection regulations imposed on traditional dealerships.
“The general thrust is that Tesla is misleading consumers into thinking the monthly cost that you’re going to pay for one of their vehicles is substantially lower than the actual money” that consumers will have to pay, Maas said.
“It’s misleading,” Maas added. “If you checked every box on their true cost of ownership series of inquiries, they claim you can get a Model S for $114 a month, which is lower than the cheapest [new] car available in the United States, the Nissan Versa — which would cost you, with a lease deal, about $139 a month.”