Although Canada is taking steps to increase the use of electric vehicles (EVs), sales remain low. The nation is currently developing its infrastructure to support electric cars by adding hundreds of new charging stations, and several territories have implemented their own initiatives, such as incentives for new stations in British Columbia and government-deployed stations in Ontario. To take advantage of this situation, one new manufacturer of electric cars, Tesla, has expanded its North American Market. Tesla, however, has several legal obstacles that must be overcome for the endeavor to be successful.
Tesla Enters the Market
Automotive sales in Canada for 2012 are set to be the second highest in history, but the trend has not included fully electric vehicles. As of the beginning of 2013, only 16 EV models are available for sale to the public. However, this number is expected to be 40 or more by 2014.
Nearly all of the large, automobile manufacturers are putting significant resources into the research and development of fully electric cars, and a few startups focused only on EVs have entered the market. One of these startups is Tesla, a company that was founded in California’s Silicon Valley in 2003.
Tesla operates out of Palo Alto, California, and in 2008, its first retail location was established. The company currently operates 31 sales centers across the world. Most of these are located in the United States and Europe, but single locations have been established in Japan, China and Australia. Tesla’s sole Canadian outlet is in Toronto.
Tesla Hits a Bump in the Road
As a startup, operations have run smoothly for Tesla, but soon after its sales centers were opened in the United States, the company was hit with multiple lawsuits. Dealership organizations in both New York and Massachusetts have filed suits against the company, and several more are pending in other states.
The issue mentioned in the lawsuits is the fact that Tesla seems to have ignored U.S. and Canadian law regarding how cars may be sold to the public. Under current law, auto manufacturers may not sell their vehicles directly to the public. Only third-party dealers may sell new vehicles.
The dealership associations suing Tesla have the support of their respective state boards and the manufacturers with which they are associated. Speaking on the issue, a representative from the National Automobile Dealers Association (NADA) said that dealerships offer consumers a reliable and strictly regulated network for the sales and service of new vehicles.
Tesla Claims Innocence
In response to the lawsuits, Tesla’s vice president of sales and ownership, George Blankenship, said that the company is taking every measure to operate within the boundaries of the law. He went on record stating innocently that the company only wants to get the public interested in EVs. “I want people to want the car. I don’t want to sell them the car,” said Blankenship.
Blankenship was recruited by Tesla in 2010 from Apple to take charge of the company’s retail sales model. He contends that Tesla is only promoting and educating the public about the company’s cars through the sales centers and not selling them. The reasoning behind this is that customers cannot purchase Tesla vehicles from the retail stores. They must be ordered online.
The Future of Tesla
Attempts to shut down Tesla’s retail operations have thus far proved unsuccessful. Courts are allowing the stores to remain open pending the outcome of the lawsuits. However, if added pressure comes in from other states, then this situation may change. Executives at Tesla remain confident that they are not breaking the law and continue to open new stores as scheduled.
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