California Dealers Oppose Tesla Referral program

We told you previously Tesla ran into opposition for their new referral program in Virginia, now the electric car company is finding similar roadblocks in California.  Under the Tesla initiative, which is running nationwide till Halloween, if a current Model S owner provides a referral to a consumer who purchases a new Tesla Model S, both parties stand to gain. The referral giver under the Tesla program gets $1,000 toward service and/or upgrades while the recipient of the referral gets $1,000 off their Tesla Motors vehicle purchase.

In Virginia the program was found to be in violation of state bird-dogging laws. Tesla’s answer was too simply give the entire $2,000 discount to the recipient of the referral and nothing to the referral donor.

The latest opposition to Tesla’s referral program, which is a self-proclaimed “guerrilla tactic against car dealers,” comes from the California New Car Dealers Association. The opposition on the part of the California dealers stems from 1968 California Motor Vehicle Sales and Finance Act. That 1968 law reads in part, “It shall be unlawful for any person to act as a vehicle salesperson without having first procured a license or temporary permit.”

The California New Car Dealers Association have sent a letter to the state department of motor vehicles asking for them to, “crack down on Tesla’s referral program.” The letter further states, “Tesla is required to abide by the same consumer protection rules that apply to all other vehicle dealers in California. While many other licensed dealers would like to offer similar referral fees to existing customers, California law flatly prohibits the practice.”

Tesla Motors is already banned from selling direct-to-consumers in multiple states. When Tesla is outlawed from selling using their direct sales method they get involved in lengthy legal and legislative battles. Those battles are always with state dealer associations. The dealers’ side of the argument to Tesla is that now that you’re an automaker, prepare to follow the same laws as everyone else. Tesla counters by saying the franchise system is out-of-date and that consumers will want to follow their more modern take on auto sales. They also counter that franchise laws don’t apply to them since they use a different model.

Tesla Motors appears ready to go state-by-state in order to fight to change automotive sales laws to fit their current business model. Tesla Motors founder Elon Musk has mused several times that Tesla may work with dealers in the future in some sort of hybrid program that incorporates direct sales and franchise dealerships. However, for the time being, the California-based automaker is content to stay at odds with dealer groups nationwide.

Do you think Tesla Motors will ever work with franchise dealers? Do you think that Tesla Motors will last during the next five to 10 years without being bought out by a larger organization?