Tesla CEO Elon Musk, pictured at the opening of the Tesla factory Berlin Brandenburg in Gruenheide, Germany, Tuesday, March 22, 2022. Musk’s car firm is suing Louisiana car dealers and their regulatory commission, alleging collusion and antitrust practices that hinders Tesla sales. (Patrick Pleul/Pool via AP, File)
Louisiana Attorney General Jeff Landry
Tesla CEO Elon Musk, pictured at the opening of the Tesla factory Berlin Brandenburg in Gruenheide, Germany, Tuesday, March 22, 2022. Musk’s car firm is suing Louisiana car dealers and their regulatory commission, alleging collusion and antitrust practices that hinders Tesla sales. (Patrick Pleul/Pool via AP, File)
Attorney General Jeff Landry has weighed in on a federal lawsuit brought by electric-car maker Tesla against Louisiana’s car dealers, arguing that a state law prohibiting direct-to-consumer car sales protects car buyers.
The lawsuit from Tesla, which is owned by billionaire Elon Musk, was filed in the U.S. District Court for the Eastern District of Louisiana in August. Tesla argues that Louisiana’s law “effectively shuts out of Louisiana the consumer-centric, free-market solution that is a more efficient, consumer friendly business model for today’s automotive consumer.”
Louisiana Attorney General Jeff Landry
It further argues that the direct-sales approach is needed to adequately explain the benefits of its electric vehicles to customers, and that there’s collusion between Louisiana’s automobile regulator and its car dealers — groups whose members often overlap — in order to suppress competition.
In a filing on Tuesday, Landry’s office countered that the state law, which was updated in 2017, seeks to “interpose a dealer between vehicle manufacturers/distributors and consumers…to protect the state’s consumers from pernicious practices in motor vehicle transactions.”
The attorney general’s filing also said it is seeking to intervene because Tesla’s lawsuit doesn’t provide for any defense of the law by a state entity. The lawsuit named as defendants a group of individual car dealers, members of the Louisiana Automobile Dealers Association and the 18 members of the regulatory body known as the Louisiana Motor Vehicle Commission, who are mostly car dealers.
“Conspicuously unnamed is the commission itself, thus leaving the case without a ‘state or any agency, officer, or employee thereof’ as a party to the litigation,” Tuesday’s motion by the attorney general’s office noted.
The office said that it wants to be able to subpoena records from Tesla about its leasing operations in the state. A district court in Jefferson Parish had blocked earlier attempts by the defendants in the case to obtain those records.
The lawsuit is part of a broader campaign by the Austin, Texas-based car company to try and break down a decades-old franchise system preventing manufacturers like Tesla, Ford or General Motors from entering the business of retail car sales.
The dealership system dates back decades to when independent dealers argued they could prevent carmakers from having too much power over consumers and to ensure local after-sales servicing.
However, in recent years 18 states have changed the requirements for independent dealers in direct response to Tesla and its mold-breaking direct-sales strategy. Meanwhile, several states have doubled down on laws preventing direct sales, with Louisiana and Texas — Tesla’s new home state — among them.
Will Green, President of the Louisiana Automobile Dealers Association, said of Tesla’s lawsuit that “the factual allegations appear baseless and grossly misstate the specific history of the plaintiff’s doing business in Louisiana.”
The lawsuit alleges that members of the trade body and the regulatory commission have colluded to exclude Tesla not only from direct sales but from leasing its vehicles in the state.
“Tesla has uncovered communications between the dealers association’s members and the commission evidencing a common purpose to exclude Tesla from operating in Louisiana,” the lawsuit alleges.
“Although Louisiana law (unconstitutionally) prohibits Tesla from selling its vehicles in Louisiana, nothing in Louisiana law prohibits Tesla from leasing its vehicles in Louisiana or providing warranty repairs and services for the many Tesla vehicles in Louisiana,” it says, alleging that the law violates federal and state antitrust laws and state prohibitions against unfair trade practices.
Tesla didn’t respond to requests for additional comment. The company’s lawyer in Louisiana, Mark Beebe, declined to make any additional comment.
A car buyer in Louisiana who wants to buy a Tesla currently can do so by ordering via the company’s website, which is then considered to be an out-of-state purchase.
Tesla opened its first warehouse in Louisiana three years ago, at the corner of Tchoupitoulas Street and Washington Avenue in New Orleans. It remains the company’s only service center in the state.
Louisiana has a relatively small number of electric vehicle owners, with a little over 3,100 in 2021 out of a total of nearly 2 million registered cars in the state, according to industry tracker Electrek, citing Experian Information Solutions data.
Tesla’s action comes in the wake of the passage earlier this year of the Inflation Reduction Act, which contains a big tax break for electric vehicle purchases as well as other initiatives to spur a quicker move toward electric car ownership.
A move by California lawmakers to ban gas-powered cars by 2035 is expected to be followed by some other states and hasten the move toward electric vehicles, which are fast growing but still accounted for just 630,000 out of the 15 million cars and trucks sold in the U.S. last year.
Email Anthony McAuley tmcauley@theadvocate.com.
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