Tesla Loses Direct Sales Battle In Utah At Supreme Court Level

Tesla Service Center

APR 7 2017 BY STEVEN LOVEDAY 35

Tesla

Tesla Model X SUV

Last year, Tesla unsuccessfully contested Utah’s interpretation of laws that were making it impossible to sell its vehicles within the state. Fast forward to the present, and Utah’s Supreme Court has unanimously denied the automaker once again.

Tesla Model 3

Model 3

The hearing last year was held in order for Tesla to point out that, according to the language of the laws, it wasn’t illegal to sells its cars in the state of Utah, but instead, only illegal to sell car without a franchise dealership. The automaker spent $3 million building a showroom in the state, and created “Tesla UT” in order to provide a viable workaround to having a “dealership” to support state laws.

Utah Supreme Court officials didn’t seem to care about the company’s efforts. They voted 5-0 against allowing the Silicon Valley automaker to sells its cars directly to customers at Utah stores. According to Teslarati, Tesla’s lawyer, Todd Maron said in the past:

“Our position is we should be able to sell completely directly. I think it’s wrong we can sell in China and not in Utah.”

The electric carmaker is still in the midst of similar cases in other states, and plans to keep pushing forward to sell its vehicles. The company has no intention to halt its efforts. Following the case, a company spokesperson shared (via Teslarati)”

“The Utah ruling is disappointing for Tesla and all Utah consumers interested in consumer choice, free markets, and sustainable energy. We will pursue all options to ensure that Tesla can operate in Utah without restriction. In the meantime, we will continue to provide service and limited sales activities (through our used car license) at our location in South Salt Lake.”

For now, those who want to purchase a Tesla must leave Utah and buy it somewhere else. The automaker is allowed to keep its Salt Lake City store and can utilize it as a showroom and service center. However, the situation is the same in other states with similar bans: the electric automaker cannot sell, nor even mention pricing of its vehicles in the store, and even test drives are prohibited.

With the mass-marketed Model 3 production date nearing, laws like these are an unfortunate speed bump for Tesla, and furthermore, consumers will have to suffer the inconveniences, or choose another car. Perhaps that’s exactly what the states are hoping …

Source: Teslarati

Categories: Tesla

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35 Comments on "Tesla Loses Direct Sales Battle In Utah At Supreme Court Level"

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David Schurig

“…and even test drives are prohibited.”

I test drove a model X at the Utah Tesla store. Perhaps it was considered a used car, and not subject to the ban.

unlucky

Maybe you drive a used one?

Or it’s possible you just got an illegal test drive. Neither the potential customer nor Tesla is interested in enforcing the ban so unless they think you are an undercover agent looking to make a sting they may just give you a test drive anyway.

Tilyon

All Dealers need to be tricky to make money to survive

Mark.ca

What would be the logic behind prohibiting the test drives? I understand they don’t want them to sell in their state but to prohibit the test drives seems an obvious overreach. I guess when you live in the past the future is scary…

Pushmi-Pullyu

“What would be the logic behind prohibiting the test drives?”

You’re asking the wrong question. The motive behind this hypocrisy is protectionism. Logic is irrelevant here.

JIMJFOX

Well said. Far too many dipsticks in positions of power, self-interest trumping the public good.
Big Oil is alive, kicking & well funded.

Principle is a dirty word in Utah, where stupidity rules in the name of ‘freedom’ [isn’t that where the Mormons are?]

Tilyon

For Utah is run by à bunch of car Dealers. Tesla dont need any car Dealers.

Get Real

Just goes to show the underlying hypocrisy of this deeply red state based on so-called “conservative” values like free markets and competition.

theflew

Let’s be honest the states are just protecting their interest. If Tesla could sell nationwide without dealers how long do you think it would take GM, Ford, Honda, Toyota, Hyundai, Volkswagen, BMW, etc… to create a new EV brand? This isn’t about Tesla it’s about the floodgates that will open behind them with domestic and foreign automakers.

Mark.ca

So what are they protecting exactly?

SparkEV

Bribe payments from dealers to politicians.

JIMJFOX

The money-making, wasteful status quo, surely?

Stimpy

You say this like that would be a bad thing.

May the best business model win!

Cid

That’s full of the stuff that comes out of people’s rectal cavities.

The interest of the people isn’t protecting stealerships, neither are we living in a backward age when car companies can do whatever they want (maybe if Trump has his ways) without information being disclosed nationally within minutes. Competition is what should drive the car business, and if GM and other old fart companies think it’s fine to use stealerships, then let them. But don’t take my choice away.

pjwood1

“rule of law” = Their rules

SJC

The state court just ruled there was nothing in the legislation that violated any part of their state constitution.

MarkT

Can Utah residents purchase online and register a new car instate or is that banned as well?

SJC
(⌐■_■) Trollnonymous

Vote with your wallets folks!

The members listed below are the same that fight against the sales method of Tesla. Collectively the “Alliance” is also pushing back against CARB/EPA. They want to continue polluting our air.

https://autoalliance.org/connected-cars/automotive-privacy-2/participating-members/

Buying from any of them helps pay and support their legal battles agains CARB/EPA and the Tesla sales model.

unlucky

Actually, it’s the dealers who fight back against repealing these laws. Middle men don’t like to be disintermediated.

The big auto companies are more interested in there not being special carve outs that allow Tesla to sell direct when they legally cannot. Oddly, in some states there are such exceptions. Why “small” company like Tesla which is aiming to sell a mere 100,000 cars next year would be allowed to do this while other companies cannot doesn’t make any sense.

Mark.ca

“…allow Tesla to sell direct when they legally cannot. ”
Did anyone actually ask manufacturers what they want or the dealers are just talking too loud?

vrykolas

We purchased an X in Texas (which also bans sales of Tesla).

We had multiple test drives over the last couple years and even finalized/configured the last bits of confirmation in the Dallas showroom. It was painless and quite a pleasant experience.

The only difference in paperwork was the paperwork had to be done via Fedex. During delivery was also pleasant. It arrived with California temporary plates and paperwork basically stated it was ‘purchased’ in California.

Then we simply stopped by the local DMV to pay registration and sales tax. Overall it was MUCH better than a typical dealership purchase experience. I can’t imagine how much easier it is in a state that *allows* direct sales.

Stimpy

Thanks for posting this detail. Sounds wonderful!

I’m excited about finally having the choice to skip the third-party dealer middleman that is frequently a source of disappointment just as I bypass phone carrier stores and mall kiosks when buying an iPhone.

unlucky

Not terribly surprising. It is the law after all. And a captive (owned) franchise dealership is not a franchise dealership, it’s just a trick.

Pushmi-Pullyu

That’s fair. I hate to admit it, but the Utah Supreme Court probably did rule correctly according to the wording of their own State law or laws. The problem lies not with the court’s interpretation of the law, but with the law itself. No State laws protecting dealerships from predatory practices by auto makers were intended to keep out independent auto makers which don’t use the franchise systems, but those laws were written in an era long before the Internet, when lawmakers could not have envisioned ordering a car and all its options online directly from the manufacturer.

Sadly, in some cases State Auto Dealer Associations have bribed lobbied State legislatures to change the existing laws for the specific purpose of keeping Tesla out. 🙁

Mister G

Utah is owned by fossil fuel industry.

silversod

WoW! I find the whole thing totally bizarre, They really have closed ranks on Tesla. I can smell the stench of desperation from the oil burning car producers all the way across the Atlantic.

CDAVIS

Law of Unintended Consequence:

Traditional car makers working very hard in several states to continue a ban on Tesla from selling direct has turned out to be good free marking for Tesla.

Nelson

I guess I won’t be retiring in Utah.
Or vacationing there.

NPNS! SBF!
Volt#671

(⌐■_■) Trollnonymous

+1

lol, never even thought of going there.
Now more reason to avoid.

Ocean Railroader

Here is a story with Tesla fighting it out with the Good Ole Boys system in Vriginia http://richmondbizsense.com/2017/03/24/tesla-fights-vada-appeal-presses-on-with-richmond-outpost/

I hope Tesla wins so I can apply for a job at their new store.

JIMJFOX

Same ole same ole same… change a fully entrenched rip-off? You must be joking!

cab

Our experience in Texas (which also bans direct sales) is the same as vrykolas’ above. i also see enough Teslas around here that it doesn’t appear to be an “issue”. There are some subtle nuances. Test drives, as an example, don’t seem to be “walk in a test drive it” affairs. Instead you have to book appointments online. When you call for service, you go to California and then get re-directed to the Dallas (in my case) service center.

The paperwork is as described above – all done through California and you have to do all the DMV stuff yourself. Having done a few private sales/purchases myself over the years, none of this was a big deal, but the avergae car buyer is woefully uneducated and unprepared for this stuff and having a seller “handle it all” would definitely be a plus…this will be especially true when the Model 3 arrives.

alex

“consumers will have to suffer the inconveniences, or choose another car. ”

That problem was created by Tesla, nobody else, they think their are special and are entitled to operate above the law.

Cid

What if the law is outdated and make as much sense as prohibiting blacks and whites from marriage?