This week, a trade group representing California's new-car dealers urged the state Department of Motor Vehicles to launch an investigation into the way that Tesla Motors (TSLA) markets its all-electric Model S sedan, arguing that the Palo Alto-based company inflates the benefits of its financing option on its website.
But Tesla is fighting back, saying Thursday that the complaint, which Tesla says is without merit, needs to be viewed in a broader, national context: Car dealer associations across the country are trying to block Tesla's progress, as the Palo Alto-based company takes market share from other brands.
Major automakers sell their cars through franchised dealerships; Tesla sells the Model S directly to consumers through its own stores. That's earned Tesla the wrath of dealers, who have succeeded in barring Tesla from selling directly to consumers in Texas.
"There are state dealer associations in all 50 states, and a national dealer's association. They would have you believe there is no coordinated activity," Diarmuid O'Connell, Tesla's vice president of business and corporate development, said in an interview Wednesday. "It's incredible to believe that in all the conference calls that there isn't a coordinated effort to retard our progress either in selling directly to consumers or slowing our sales. We are taking market share away from other brands in the California market. I believe there is coordinated activity."
Denying the charge, Charles Cyrill, a spokesman for the National Automobile Dealers Association, said Wednesday that "this is a state issue that is being debated in the states."
The California New Car Dealers Association, which represents 1,100 new car and truck dealers, in a nine-page letter Monday asked the state DMV to look at Tesla's advertising practices.
Its claims about the monthly finance payment for the Model S "is both misleading and illegal," Brian Maas, president of the California New Car Dealers Association, said in a statement.
Tesla does not advertise in the traditional sense, but has a self-service calculator on its website where consumers can enter information about how valuable their time is and the length of their commute.
Jan Mendoza, a representative for the California DMV, said Wednesday that the agency "receives complaints from the public and other entities and may investigate issues under its legal authority if warranted."
The state dealers association's August newsletter included sales figures through June 2013 that show that Tesla sold more cars in California than established brands like Cadillac, Jaguar and Porsche. The group's letter to the DMV came three weeks later.
Tesla sold 12,351 Model S sedans through August; California is thought to account for roughly half of all sales.
Contact Dana Hull at 408-920-2706. Follow her at Twitter.com/danahull.