Tesla takes dealership fight in Utah to state supreme court

Franchised dealers in multiple states have worked to block Tesla electric-car sales, because they view the company's practice of selling cars directly to customers as a threat to their business model.

Stephen Lam/Reuters/File
A Tesla Motors Model X electric sports-utility vehicle opens its falcon wing doors on stage during a presentation in Fremont, Calif.

Utah continues to be a battleground in the state-by-state war between Tesla Motors and state auto-dealer groups.

Franchised dealers in multiple states have worked to block Tesla electric-car sales, because they view the company's practice of selling cars directly to customers as a threat to their business model.

At the same time, Tesla has fought back against state sales bans, focusing more of its efforts on Utah over the past few months.

The carmaker is now moving ahead with plans to argue against the state's franchise laws in front of the Utah Supreme Court, according to Utah Business.

Tesla announced its intention to take the fight to the state supreme court back in March, after legislation meant to serve as a compromise between the carmaker and Utah franchised dealers died.

Drafted by Representative Kim Coleman (R), HB 384 came after more than a year of negotiations between Tesla, Utah dealers, and lawmakers.

Like many other states, Utah franchise rules prevent automakers from selling cars directly to customers.

The bill would have given Tesla a path around that prohibition, but when officials saw the final version, they decided that it would ultimately do more harm than good.

Tesla took issue with several restrictions it claimed at the time were inserted at the behest of franchised car dealers.

That included provisions which would have required Tesla to deliver cars directly to customers, and prohibited the automaker from keeping inventory wherever it wanted in the state, or allowing customers to pick up their cars at showrooms.

"HB 384 would have allowed Tesla to be licensed in Utah," the company said at the time, "but only with severe restrictions that would have harmed our Utah customers."

Tesla has since moved ahead with a pending lawsuit before the Utah Supreme Court, hoping to win the right to sell cars in the state on its own terms.

A decision on the lawsuit isn't expected until this fall at the earliest.

This latest skirmish comes as Tesla works to expand its network of company-owned stores in anticipation of increased sales volumes.

In its second-quarter letter to shareholders, Tesla said it will add a new store location every four days throughout the end of this year.

That will help support CEO Elon Musk's plan to produce 500,000 electric cars per year by 2018.

This story originally appeared on GreenCarReports.

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