Hard to pick a side on this one

Tesla Motors has gone all the way up to the Supreme Court in its desire to lift the ban imposed by the state of Utah on the company selling its electric cars directly to consumers without having to go through a third party. The issue between the automaker and the state stems from Utah denying Tesla a license to sell its vehicles in its borders over what it claims to be non-compliance on Tesla’s part with the state laws that require manufacturers to enter into franchise agreements with dealerships before they’re granted a license to sell cars in the state.

Evidently, Tesla sees it differently and is contesting the decision on the grounds that the ban is preventing the company from tapping into what it considers a potentially lucrative market. The company also argued that it had already complied with all local laws by setting up “Tesla Utah” as a separate entity from the automaker itself and has even built a new dealership in South Salt Lake in 2015 that has been relegated to a showroom and charging station since the ban was put in place in the early part of 2015.

To be fair, both sides have come together in the past to discuss the situation. There were even attempts to tweak the law to accommodate Tesla, but those were pushed back by dealerships and other automakers who voiced their opposition over what they believed to be the government acquiescing to Tesla to meet its demands. As such, negotiations have been at an impasse since March 2016 as the issue snaked its way through the court system before being brought up to the highest court in the land: the Supreme Court.

Supreme Court justices have already met regarding the issue, but don’t expect a ruling to take place for at least a few more weeks, maybe even longer.

Continue after the jump to read the full story.

Both sides have good points

This one is a toss-up because Tesla and the state of Utah make valid points, even if the other side doesn’t appear to be inclined to accept it.

From Tesla’s side, it claims to have adhered to local laws on the matter, even going so far as creating that Tesla Utah entity as a separate unit from the company to act as its dealership. Also, it does feel a little strange that the company is getting banned from selling direct to customers in Utah when it can already do the same thing in a lot of other states. It can even cite a similar legal issue it had in New Jersey, which ended when the state changed its law to allow Tesla’s business model. Another similar issue arose in Arizona and the automaker won that battle too. Then there’s the quote from Tesla’s general councel, Todd Maron, who said that Tesla is able to sell its models “across the whole world, including China, all through Europe, all through Asia” and not be allowed to do it in Utah, which is a stone’s throw away from the company’s stomping grounds in California.

From the state of Utah’s side, the law is still the law and decisions made in other states should not influence any decision it makes in its own borders. Utah Deputy Solicitor General Stanford Purser also made a good point when he stressed that the law preventing direct selling to customers was put in place to protect dealerships and provide some negotiating incentives to customers. Giving Tesla a pass on those requirements would not only undermine other dealerships and automakers, it would also make a mockery out of Utah’s own laws. “The state has an interest in maintaining the integrity of that chosen model," Purser pointed out.

While a decision isn’t expected to be made anytime soon, at least one justice, Deno Himonas, appears to be siding with Tesla by questioning whether dealerships are really being protected by the franchise requirement if Tesla owns its own dealership. "Where is the incentive? They’re only harming themselves,” Himonas said.

“They own 100 percent of the stock of the company. They’re not franchising to anybody, is the point. They’re not McDonald’s selling franchises."

However this issue gets solved, I just hope that at some point, Utah residents who may want to own a Tesla in the future will have other avenues to buy these models other than having to go online to do it.

Source: Salt Lake Tribune

Kirby Garlitos
Automotive Aftermarket Expert - kirby@topspeed.com
Kirby’s first exposure into the world of automobiles happened when he caught Knight Rider on television as a five-year old boy. David Hasselhoff didn’t leave much of an impression on him (that happened later on in Baywatch), but KITT certainly did. To this day, Kirby remains convinced that he will one day own a car with the same ‘spirit’ as the original KITT (not the 2008 monstrosity). He doesn't know when that will be, but until then, he’s committed to expressing his love for KITT, and all cars for that matter, here at TopSpeed.  Read More
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