![]() ![]() ![]() “When the definitions are read together, a ‘manufacturer’ under the Franchise Act manufactures or assembles ‘new motor vehicles’ that have been sold to a ‘new motor vehicle dealer,’” Seitz wrote. The judge also concluded that Tesla is not a “new motor vehicle dealer” because it does not enter into franchise agreements with third parties. He also found that a Tesla cannot be defined as a “new motor vehicle” because that term applies to a vehicle that has been sold to a dealer. The judge ruled against Tesla even though he agreed that its business model was likely not contemplated by the franchise law. Tesla then appealed to the Superior Court, where it lost again. Despite determining that Tesla and its direct-to-consumer sales model did not meet the definition of a “new motor vehicle dealer” under the franchise law, the official concluded that Tesla was still a “manufacturer” under the law.Īn administrative hearing officer later agreed that, as a manufacturer, Tesla could not sell new vehicles directly to Delaware consumers. The DMV official said Tesla’s application did not comply with the law because the Franchise Act prohibits a vehicle manufacturer from directly or indirectly owning an interest in a dealership or from acting as a dealer. The DMV’s Chief of Compliance and Investigation denied it, noting that Delaware’s Licensing Act for automobile dealers requires that an applicant comply with state law before an application can be granted. Tesla submitted a second application for a dealer license in 2020. “It bears repeating that the Franchise Act regulates the business relationship between a manufacturer and a dealer,” wrote Chief Justice Collins Seitz Jr., adding that nothing in the law or its legislative history supports DMV’s interpretation that the Franchise Act is intended to prohibit the direct sales model. The justices said the law’s definitions exclude Tesla because the company sells its vehicles directly to consumers without using independent franchise dealers. The Supreme Court reversed that decision and sent the case back to Superior Court, noting that the franchise act was enacted to address the disparity in bargaining power that permitted automobile manufacturers to exert economic pressure over their franchises. In a ruling last year, a Superior Court judge determined that Delaware’s Motor Vehicle Franchising Practices Act prohibited Tesla, as a manufacturer, from selling its electric cars directly to customers in Delaware. ![]() Delaware’s Supreme Court on Monday overturned a judge’s ruling upholding a decision by state officials to prohibit electric vehicle maker Tesla from selling its cars directly to customers. ![]()
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