Initial DMV ruling: Pull plug on planned Richmond Tesla dealership

Several Teslas dotted the DMV parking lot during the March hearing. (Linda Dunham)

Several Teslas dotted the DMV parking lot during the March hearing. (Linda Dunham)

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.

In April, Tesla leased the property formerly housed by Bassett Furniture.

In April, Tesla leased the property formerly housed by Bassett Furniture.

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.”

Subscribe
Notify of
guest
11 Comments
oldest
newest most voted
Inline Feedbacks
View all comments
Ray Lepper
Ray Lepper
4 years ago

It’s unbelievable that the Commonwealth allows such an obviously protectionist law to remain on the books. If the book dealers in Virginia had done a better job of lobbying we wouldn’t have Amazon.

It’s time to move on. If people really believe in free markets, this law has got to go.

Justin Dooley
Justin Dooley
4 years ago

Regarding Mr. Hall’s comment: “Decades ago the General Assembly decided that consumers and the public interest are best served by dealerships owned and operated by franchisees…” I doubt those legislators decades ago were making those decisions thinking about high performance, software enabled electric powered vehicles. A Tesla buyer is not the same buyer decades ago that was trading in their horse and buggy for a new Ford. They are a well informed consumers exercising their right to spend their money how they choose. But, alas special interest wins again in this case.

Ethan Lindbloom
Ethan Lindbloom
4 years ago

I think it’s time to get some legislative help on this one. The law is so obviously anti-consumer. State-sponsored protection of the middle man hurts us.

David Tindall
David Tindall
4 years ago

It seems that the special interest groups won. We have this property in Henrico doing nothing that could bring a lot of people and jobs to the area. What is the greater good? I hope the broader group overturns or the legislators changes the law.

Why was it allowed in NVA and not here?

Bert Hapablap
Bert Hapablap
4 years ago

These regulations seem very antiquated for this day and age. The General Assembly needs to repeal these because it’s hurting new and competitive businesses and the consumer’s options.

Coaltrain Harris
Coaltrain Harris
4 years ago

Daniel Small is a minion in the pocket of the VADA. Richard Holcomb will decide if the applications is approved within 60 days and the position of DMV commissioner is elected by your governer. Call McAuliffe’s office and tell them what Virginia needs!

steven cohen
steven cohen
4 years ago

Sure…the power of the RVA car dealers, GMAB. It is ridiculousness that we waste tax payer dollars on such stupid issues. Personally; I would give those egotistic car dealer owners the rights to sell the cars including building the required infrastructure and then let them choke to death on their own P/L’s.

Respectfully;

Steven Cohen

Charles Batchelor
Charles Batchelor
4 years ago

The rules in Virginia protecting the dealerships are obviously no longer in the public service, if they ever were. Dealers are right to view any changes to the established rule of car buying as a threat.Their current system can be so aggravating to customers anything different could likely attract their attention. Having just bought a new car, I can identify with this report: http://wardsauto.com/f-i/clueless-car-dealerships-unwittingly-tried-stop-sale?page=1

Sean Stilwell
Sean Stilwell
4 years ago

I think the internet is the great equalizer in this instance. It’s time for VADA to go the way of the travel agent….

Bert Clark
Bert Clark
4 years ago

Another example of government intervention in the marketplace.

Why does the consumer care if their Tesla is purchased or serviced by the factory-corporation in California or a dealer-corporation that is an out-of-state owner of scads of dealerships?

Do the internal combustion dealer-owners know very much about this technology?; superior customer service? Doubtful.

Just let the marketplace sort this stuff out without government intervention.

James Dubbins
James Dubbins
4 years ago

The article states “The DMV stated that 11 dealers already licensed in the state and operating in the public interest expressed desire to run a Tesla dealership.” What a joke! Anyone can “express interest”. In no way does that mean they are actually committed! Also, If these dealerships are operating in the “public interest”, why do I and many others feel surrounded by sharks when we go shopping for an automobile? What an antiquated monopoly and anti-free enterprise. I would rather buy directly from the manufacturer! Protectionism for who? The consumer? Not! Folks, contact your legislators and let’s get things… Read more »