Tesla Motors, the California-based electric vehicle manufacturer, has quietly withdrawn its lawsuit against the state of Connecticut, according to company officials
The withdrawal of the lawsuit, which Tesla filed in June 2017, occured Thursday, company officials said. It had been filed after the state Department of Motor Vehicles ruled the automaker was selling cars — rather than just providing information to consumers interested electric vehicles — out of a storefront “gallery” it had in Greenwich at the time.
Tesla ultimately closed the facility in January 2019, about a month after state Superior Court Judge Joseph Shortall sided with the DMV’s assessment. There are no immediate plans to reopen the Greenwich facility, according to company officials.
State law prohibits the direct sale of vehicles to consumers by manufacturers; it requires sales through a franchise dealership license, while Tesla’s business model is to sell directly to consumers. The trade group representing Connecticut’s franchised car dealers, the Hartford-based Connecticut Automotive Retailers Association, has actively opposed Tesla’s effort to change that law.
Jim Fleming, president of the dealer trade group said Shortall’s ruling was critical because it validates “that what Teslsa was doing in its gallery stores constitutes selling and is a violation of Connecticut law, which requires a dealer license to sell automobiles.”
“This ruling ensures essential consumer protection and fair lending laws remain in place to protect Connecticut’s car buying public,” Fleming said. “Connecticut dealers are offering and selling a wide range of electric vehicles. There are more than 300 different EV models, the majority of which are affordable for customers at many income levels.”
The withdrawal of Tesla’s suit comes about a month after the DMV issued the company the necessary approvals to begin leasing vehicles out of its Milford service center on Boston Post Road. The company notified electric car enthusiasts it was using the Milford facility for leasing as well as service in mid-December.
Visitors now can speak with a Milford gallery staff member about electric vehicle technology and take a demonstration drive if they are considering leasing a Tesla, company officials said.
Bruce Becker, a Fairfield County developer who is president of the state’s Electric Vehicle Owner’s Club, said Friday in a statement that Tesla’s decision to drop its lawsuit, along with the DMV’s decision to end its opposition to Tesla’s leasing activity, benefits the state in multiple ways.
“State officials have set an ambitious goal of having 500,000 electric vehicles on the road by 2030,” Becker said. “To meet this goal, electric vehicles must become more accessible to consumers. Tesla’s decision to move forward with leasing is a huge step towards achieving this goal; year after year, Tesla sells more electric vehicles by far than any other car maker.”
Becker noted that other states, such as New York and Massachusetts, already have made Tesla’s direct-to-consumers business model legal.
“It’s time for the state legislature to follow Governor Lamont’s lead and support this great opportunity to achieve our goals,” he said.
Joseph Allan MacDougald of Madison, a professor at the University of Connecticut School of Law, said he just got a new Tesla last month right before news that the company was leasing cars in Milford became public. That meant he had to drive to Mount Kisco, N.Y., to do the transaction.
“Let me tell you, for someone to go to Mount Kisco to buy a car, you really have to want one,” MacDougald said. “The day I was there, they had an inclredibly long line and it was all people from Connecticut.”