Electric carmaker Tesla argued before Utah’s Supreme Court on Monday in its bid to legally make direct sales to customers.
Currently, state law prohibits manufacturers from direct sales of new automobiles except through franchised dealerships — a common setup for many major car makers.
Charles Lifland, an attorney for Tesla, says the prohibition shouldn’t apply to them.
“What Tesla is trying to do is come in and compete fairly against the other dealers and manufacturers in the market selling other brands," he said. "It’s a giant leap, I think, to read the franchise act as prohibiting that.”
Lifland says laws meant to protect franchisees from unfair competition don’t apply to Tesla because they don’t have franchises.
Supreme Court Justice Thomas Lee asked whether the subsidiary that Tesla set up for its showroom, called Tesla Motors Utah, could be considered a franchise.
Lifland replied the subsidiary is wholly owned by Tesla and not a different entity.
Attorney Stanford Purser, representing the Utah Tax Commission, disagreed.
“Even if somehow Tesla were correct that there is no franchise between Tesla and Tesla Utah...then they’d be in violation of 201-1-CC, which prohibits a franchisor from directly or indirectly selling a new motor vehicle except through a franchise new motor vehicle dealer," said Purser. "Either way, they were properly denied a license here.”
The case is now under advisement and a ruling could take several months.