In what appears in the first instance to be a major concession by Tesla, Tesla and the New York Automobile Dealers Association reached an agreement on Friday that will permit Tesla to keep open its five stores in the New York portion of the New York City metropolitan area.  As readers of this blog are aware, we have been actively following the Tesla story.  Tesla has declared that it intends to sell its electric cars through showrooms owned and operated directly by Tesla, instead of by franchised automobile dealers, because of the complexity of introducing electric cars to the marketplace.

This strategy has run head-on into state dealership laws.  Every state has dealer laws, which have been found to be constitutional and, for the most part, prevent an auto manufacturer from selling its cars directly to the public.  Tesla has been challenging those requirements, with mixed success. (A helpful interactive map prepared by CNNMoney showing how those challenges are fairing so far can be found here.)  Recently, New Jersey concluded that Tesla needed to stop selling through its own showrooms on April 1st, but recent media reports say that decision is being delayed.

The New York deal is interesting because in it, Tesla reportedly agreed that future stores in New York will be dealerships.  This seems to be a significant and substantial change in Tesla’s marketing and sales distribution strategy.  If it does amount to such a change, it would seem to mark a major success for the various state automobile dealers associations who have fought Tesla with vigor.  On the other hand, it could also show that Tesla, upon further consideration, can see the advantage of sharing the costs and risks of nationwide expansion with franchised dealer networks–and business plan that so many of us know, when executed well–as I have every confidence Tesla will do, has been extremely successful.  Moreover, maybe Tesla believes that the value of its car and brand–it was after all the highest rated car by a major consumer publication last year–are sufficiently established so as to permit competition with traditional internal combustion vehicles on dealers’ lots.  Only time will tell.