Tesla Motors can continue to sell its vehicles in the state of New York and might eventually move into the dealership mode that it has continued to fight.
The New York Automobile Dealers Association and Tesla reached an agreement over the electric car company’s five stores in and around the New York City area.
The NYADA was seeking a way to have the stores shut down charging that the stores were violating the auto dealership laws that did not allow selling direct to customers. Every other automaker must rely on dealers that are independently owned to sell their vehicles.
The dealer’s association is a powerful lobbying group politically in the majority of states and seeks to prohibit all direct sales.
As part of Friday’s compromise, Tesla will continue operating its existing stores. However, any new ones will only be allowed through a dealership arrangement.
Tesla said they were pleased with the new agreement, and indication it is planning dealerships down the road.
Tesla argued that it needed to have direct sales to the consumer so that its own sales people would be able to explain all the advantages of driving an electric car.
Tesla said if it was required to use dealers, who are also selling gas-powered cars that are cheaper, the auto dealers would neglect the latest model vehicle the Tesla Model S that starts at $69,000.
Tesla has a goal of introducing an electric car that is less expensive over the next three years. It hopes it can sell 500,000 cars annually within the next 6 years, which is up from a 2014 projection of 35,000.
Tesla’s company filings concede that having no outside dealership network would be limiting increased sales of the new car.
This latest agreement is just days after Tesla was allowed a deal in the ban on sales in nearby New Jersey.
This agreement with New York is only days after the electric car company was given a delay on a ban for its sales in nearby New Jersey.
The state of New Jersey was set to stop the two stores from Tesla from selling any cars from April 1 on, however that was delayed this week until April 14.
Get Analysts' Upgrades and Downgrades Daily - Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.