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Utah Supreme Court says Tesla can't sell cars to Utah consumers, at least for now.

Posted in News

Tesla Loses Battle to Sell Cars in Utah
Utah Supreme Court says Tesla can't sell cars to Utah consumers, at least for now.

— Tesla won't legally be able to sell its electric cars in Utah after the Utah Supreme Court agreed with state regulators who earlier ruled the automaker does not qualify for a license to sell the vehicles.

In 2015, state licensing officials turned down Tesla's request to sell its cars in the state by saying a car manufacturer cannot own a dealership, something it saw Tesla was trying to do. Tesla argued it doesn't use dealerships, but does all its business through its own "service centers."

The automaker has its own showrooms to market its cars where a potential customer can learn about the vehicles from company staff, then order a specific vehicle right from the showroom. There are no "dealer lots" or inventory as seen with typical auto dealerships.

State officials say the law was put into place to prevent an automaker from opening up shop and competing against its own dealers, but Tesla argues the law does nothing but protect a monopoly, one that forces consumers to pay a middleman (the franchised dealer) when buying a car.

Tesla says consumers should be allowed to buy vehicles direct from the very company that created the cars and do it without the expense and hassle of buying through dealerships that had nothing to do with building the cars.

However, the court ruling against Tesla wasn't about selling direct to consumers, but stood on a company Tesla created called Tesla UT, a company that applied for a dealer license. The Utah justices ruled this one point is enough to uphold the decision by state licensing officials to deny Tesla a license to sell its vehicles.

The Utah ruling is the latest blow to Tesla and its sell-direct-to-consumer business philosophy. Tesla filed suit against the state of Michigan after that state said the automaker couldn't sell vehicles direct to consumers. In the lawsuit, Tesla says one Michigan legislator admitted, “The Michigan dealers do not want you here. The local manufacturers do not want you here. So you’re not going to be here.’’

At the same time, the automaker learned no vehicles would be sold in Missouri as the Missouri Department of Revenue was sued by the Missouri Auto Dealers Association to block Tesla from doing business in the state.

The revenue department had allowed Tesla to do business in the state, something that irked dealers because of Tesla's business model of not selling through dealerships. A judge ruled in favor of the dealers association by saying Tesla violates state law by selling directly to consumers.


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