An electric carmaker’s plan to open a corporate-owned dealership in Richmond may be forced to a screeching halt.
The hearing officer working on behalf of the Virginia Department of Motor Vehicles this week issued a recommendation to deny Tesla’s request to own and operate its own dealership in the Richmond market.
The recommendation was made by Daniel Small, who was appointed by the DMV to oversee the months-long hearing process that pitted the California-based auto company against the Virginia Automobile Dealers Association, a trade and lobbying group for car dealers in the state.
Tesla, run by businessman Elon Musk, sought an exception to Virginia law that prevents car manufacturers from operating their own dealerships, unless it can be proven that no other licensed dealers would be willing and able to run such a dealership independently.
Tesla argues that its business model only works if it is able to operate its own dealerships and claims that independent dealers of its cars could not be profitable. At present, there are no independent Tesla dealers anywhere in the world.
It signaled its confidence during the hearing process by leasing a 30,000-square-foot building on 2 acres at 9850 W. Broad St. It also received approval from the Henrico County Board of Supervisors in July to rezone the former furniture store for an electric car dealership.
The VADA argued that there are independent dealers willing and able to run a Tesla dealership.
It had several testify during a series of three hearings in March, April and July. The DMV stated that 11 dealers already licensed in the state and operating in the public interest expressed desire to run a Tesla dealership. That list included Carter Myers Automotive, Page Auto Group and Priority Automotive.
In siding with the VADA, Small’s recommendation stated that Tesla failed to meet its burden of proof demonstrating that no independent dealer is willing and able to operate a Tesla dealership “in a manner consistent with the public interest.”
“Simply put, the evidence does not support Tesla’s request,” the recommendation states. “There are dealers independent of Tesla – at least eleven of them – prepared to be Tesla dealers.”
The 17-page recommendation also states that Tesla’s argument regarding the potential hurdles of profitability of an independent dealership is irrelevant under current Virginia law.
DMV spokesperson Brandy Brubaker said the head DMV Commissioner Richard Holcomb has 60 days to make a final decision.
A final decision against Tesla may not end the debate. The company successfully appealed a similar decision against it in 2013 when it sought to open a dealership in Northern Virginia. A resulting settlement between Tesla, the VADA and DMV allowed it to open the location in Fairfax County, with certain conditions.
The VADA issued a press release on Thursday celebrating the initial DMV recommendation.
VADA President Don Hall said in a prepared statement: “Decades ago the General Assembly decided that consumers and the public interest are best served by dealerships owned and operated by franchisees independent of vehicle manufacturers. We welcome Tesla in Virginia, but the company must operate according to the Commonwealth’s laws and the public interest.”