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Tesla is suing over Utah’s direct sales law in order to be able to operate its Salt Lake City store

tesla salt lake

While Tesla’s battle with GM over direct sales law in Indiana is grabbing all the attention this week, there’s been a development over the same issue in Utah.

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.

Legislators and Tesla have since been trying to find a compromise ever since, but the latest proposal was rejected by Tesla, which now says it will focus on a lawsuit it filed before the Utah Supreme Court, according to the Associated Press.

The new bill would allow Tesla to operate its made-to-order business model, but would also block 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 be handled under the new proposal, which is likely what bothers Tesla.

Tesla Vice President of Regulatory Affairs Jim Chen on the issue:

 “If Utah is really about free markets, if it’s really about innovation, if it’s really about new business models that provide the consumers with choice, why would you restrict that?”

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.

The situation will remain the same until Tesla can get a dealership license in the state.

Here you can listen to a 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):

Hat tip to minuteman_d for finding this unbelievable argument.

Featured Image: Tesla Salt Lake City store via Brian Grimmett

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  1. Isak - 7 years ago

    What a tool

  2. Eric W. - 7 years ago

    I live in Utah and think the current law is Bull Shit. It is preventing another Local automobile manufacturer from being able to sell the cars that are manufactured in Utah, from being sold in Utah. I hope they win the lawsuit.

  3. anetfish - 7 years ago

    unbelievably stupid argument

  4. These laws are all complete garbage and inherently anti-competitive. I hope Tesla takes them all on.

  5. Fred - 7 years ago

    Total tools. Tesla is not operating a franchise system. . These dolts do not seem to know the sales taxes are not affected by the locale of the dealership they are collected by the locale of the buyer’s residence.

  6. Doc - 7 years ago

    I also live in Utah. These idiots, who we unfortunately have elected to office, seem to forget that sales taxes are collected in Utah on All vehicles at the time of vehicle registration. I can buy a car on Ebay but when I bring it into Utah, It doesn’t matter how or where I purchased the vehicle, I PAY the sales tax when I register the vehicle.
    Why aren’t these legislators going after ebay? Probably because ebay has a big presence in Utah with a major Western Headquarters.

  7. BJ - 7 years ago

    When you watch the whole discussion on the bill, a representative indicated they needed more time to review the bill. Didn’t they have time to review it? I can’t ask people including myself to make a decision on something without some time to analyze pros and cons. Yet they still voted anyway and the bill didn’t pass. So more than half of the state representatives stopped this from happening because they didn’t have time to review. This is why I have no confidence in politics. I live in Utah, and this is a joke. I say if the free market puts the dealership model out of business so be it. Politicians should not be making laws to protect businesses because consumer trends shift. Lots of businesses are going bankrupt because of the market changes. Look at Blockbuster or Borders books store. Tesla should be allowed to sell cars directly to consumers in the state.

    On another note. This WHOLE issue is about “direct sales.” I can order the car online at my home in Utah and pick the car up at the showroom. I was just there the other day and a Utah resident was picking up their new model X. I don’t know why people think you can’t buy a tesla in Utah or have to go to other states to buy the car. You can, it just can’t be done within the Tesla showroom. You have to click the “buy it now” button at your home or somewhere else besides the showroom.


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