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Minnesota sales of electric, gas cars collide

A messy, behind-the-scenes battle is underway in Minnesota over the way the electric car and its gas-powered adversaries are sold.
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Tesla’s pending arrival in Minnesota has outraged the Minnesota Automobile Dealers Association, which has threatened to sue over the company’s plans.

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A messy, behind-the-scenes battle is underway in Minnesota over the way the electric car and its gas-powered adversaries are sold.

Tesla Motors, the California-based electric car manufacturer, said Tuesday that for the first time it will sell its cars directly to Minnesota consumers through a retail store in Edina slated to open in August, bypassing traditional car dealerships. A Mall of America store is scheduled to open in 2014.

But Tesla’s pending arrival has outraged the Minnesota Automobile Dealers Association, which has threatened to sue over the company’s plans. The group already fought a losing battle in the Minnesota Legislature last week when it tried to strengthen the state’s 1970s dealership law to prevent Tesla and other car manufacturers from selling cars directly to consumers.

“We think everybody should play by the same rules,”said Scott Lambert, executive vice president of the Minnesota Automobile Dealers Association in St. Paul. “Tesla is trying to sell cars on the cheap, and it’s just not fair because they don’t have the cost of running a dealership.”

Tesla sells the $57,400 Model S electric car that it claims can go more than 300 miles on a single electric charge. It is the first production automobile to use lithium-ion battery cells, which the company claims makes it twice as energy-efficient as a Toyota Prius.

Although Tesla has yet to turn a profit, it already has sales or service locations in 19 other states, and says it sold 2,650 cars in the United States last year. For now, Minnesota customers can only order a Tesla car by calling the company in California or using its website.

The car dealers argue that Tesla would have an unfair cost advantage over auto dealers, who must maintain lots full of cars and advertise while also complying with recalls, warranty work and the state’s “lemon law” that deals with defective cars.

Tesla says it simply has a different business model.

“We’re cutting out the middleman,” Diarmuid O’Connell, Tesla’s vice president of corporate and business development, said in an interview. He compared the Tesla retail stores to Apple’s direct-to-consumer electronics stores.

Tesla Motors of Palo Alto, Calif., was founded in 2003 by South African entrepreneur Elon Musk, the inventor of PayPal and founder of a private space program. An earlier Tesla “proof-of-concept” roadster came with a sticker price of $109,000. Tesla says it hopes to sell a $30,000 electric car by 2016.
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