SALT LAKE CITY (AP) - Tesla on Monday took its fight to sell its sleek electric cars in Utah to the state supreme court, saying a state law that bars car makers from owning dealerships doesn’t apply to the company.
Tesla attorneys told Utah’s Supreme Court that the state wrongly denied the company a license to sell its new cars last year. Tesla sells its cars directly to customers rather than using independent dealerships.
The company contends it must sell its own cars because its business depends on convincing customers that its electric cars are better than a car with a gas engine.
Tesla attorneys argued Monday that Utah law doesn’t block car makers from selling directly, it only blocks car makers from owning a dealership that’s set up as a franchise.
State licensing officials and a powerful group of Utah car dealerships disagreed, arguing Tesla must comply with Utah’s dealer law.
Justices on the five-member court did not issue a decision in the case Monday, but they did question where in state law a car manufacturer is expressly barred from selling its cars directly. The justices also asked if the franchise law applies to Tesla because it set up a subsidiary company in Utah to sell its cars.
The Utah Automobile Dealers Association argues that Tesla is required by to comply with the franchise dealership law. The law was designed to keep large car makers like GM from pushing out independent dealers selling the same cars.
Tesla contends it hasn’t ever sold through traditional dealerships. It would be a conflict of interest for dealerships to sell Teslas because they also sell gas cars, the company says.
Tesla also maintains that the law protects a monopoly by locally powerful car dealerships and violates free-market economic policies in Utah’s constitution.
The car dealers have disagreed, arguing that if Tesla was allowed to sell directly to those buying the company’s cars, it would stifle competition.
Even in a free market, there are regulations, the automakers argue. They also dispute Tesla’s claim that it would be a conflict of interest for dealerships to sell electric cars, pointing to other electric cars like the Nissan Leaf that they already sell.
An effort to try to change the law earlier and accommodate Tesla failed in Utah’s Legislature earlier this year after the company pulled its support, saying the fix wouldn’t allow it to keep any inventory in the state. Unable to sell cars through its $3 million showroom in Salt Lake City, Tesla instead decided to take its fight to Utah’s Supreme Court.
The company has run into similar legal problems in other states. Todd Maron, Tesla general counsel, told reporters after Monday’s court hearing that Texas, Michigan and Connecticut and Utah are the only four places the company can’t sell its cars.
“Utah’s an incredibly important market, it’s a very entrepreneurial place,” Maron said. “It really, I think, is wrong that we can sell in China and not in Utah.”
The company did get a used-car license for its Salt Lake City showroom, which allows people to test-drive and purchase used cars but not new cars.
A ruling from Utah’s high court could come in in weeks or months.
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