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Tesla gets a win in Utah over direct sales and will now take it to the Supreme Court

tesla salt lake

Tesla was opposing a bill in Utah this week that would have allowed the automaker to operate its store in Salt Lake City, but under some restrictions that the company wasn’t willing to accept. Rep. Kim Coleman, R-West Jordan, officially abandoned her efforts to pass the legislation yesterday and the bill was sent to interim study, according to the Salt Lake Tribune.

It’s a small win for Tesla in Utah where the automaker still faces challenges as it is now bringing the situation before the state Supreme Court.

Tesla built a $3 million store in Salt Lake City last year, but the full-fledged store was demoted to a gallery/service center two weeks before opening due to the Utah attorney general’s office ruling that it was against the state’s direct sales law.

Under the current version of the law, Tesla can service its vehicles in Utah and potential buyers can go to the store to look at the Model S, but they can’t buy, discuss the price or take a test drive from Tesla employees.

Legislators, dealerships and Tesla have since been trying to find a compromise and the new bill would have allowed Tesla to operate its made-to-order business model, but would have also blocked the automaker from keeping any inventory at the store, which Tesla says it puts unfair limits on its business. It’s also not entirely clear how test drives and sale transactions would have been handled under the new proposal, which is likely what bothers Tesla.

Utah state legislator making the argument that Tesla shouldn’t be allowed to let people test drive its vehicles and then buy them online because his wife can’t try products from Amazon before buying them (starts at 34:12).

Rep. Kim Coleman said about the bill yesterday:

“I believe this is the best bill we’ll ever get, because we still do have problems in defining the scope and meaning of ‘sell,’ it’s a significant hangup, and I’d like to study this — and really study this — in the interim.”

To her defense, ‘sell’ is a really ambiguous term…

On the other hand, Tesla is asking for a full dealership license and to be able to sell its vehicles like any other dealership. Tesla General Counsel Todd Maron on the situation:

“I think the fundamental problem is, as Representative Coleman explained, people at the negotiating table wanted for us to not be able to sell cars in the state of Utah. They wanted to dictate the terms their competitors would be able to sell cars. In that dynamic it’s very difficult to reach an agreement. At points we were very close to an agreement, but when pen got put to paper … there wasn’t a deal to be had that was good for consumers in the state of Utah.”

Tesla was asking supporters to block the bill and let the Utah Supreme Court decide on the matter, which could create a precedent for the company facing similar problems in several states, including in Indiana where a state Senate committee decided to table for further review a bill that would have prohibited Tesla to sell its cars directly to consumers and in Connecticut, where Tesla is currently not allowed to operate a store, but is trying to pass a bill for a limited number of retail locations.

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  1. Dafty Punk - 7 years ago

    Here’s a link to the committee meeting in full:

  2. Stephen Davies - 7 years ago

    Only in the USA, the land of the Free can this happen.
    Perhaps Tesla could ‘rent’ their cars to prospective buyers in lieu of a test drive. But even that would get them sued by the rental companies.

    What’s the N.H. License plate slogan? ‘Live Free or Die’. Nuff Said (from the R.H. Side of the Atlantic).

  3. Dale Burkhart - 7 years ago

    Why not let them sell because dealerships want to make a large markup with no benefit to the public who made the rules to start dealers no dought

  4. Null66 - 7 years ago

    An hourly rent could be a way around test drive.


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