Utah Supreme Court considers whether to let Tesla sell cars here

Posted at 3:53 PM, Nov 07, 2016
and last updated 2016-11-07 18:02:46-05

SALT LAKE CITY -- The Utah Supreme Court is considering whether to allow electric car maker Tesla to sell its vehicles here.

Tesla Motors is challenging a pair of state laws that prohibit an auto-maker from directly selling their vehicles without a franchise. Tesla has been pushing for years to be able to sell its cars in Utah. It has a building in Salt Lake City, but the Utah State Tax Commission has refused to grant it a sales license, citing the laws.

"Our position is we should be able to sell completely directly," said Todd Maron, general counsel for Tesla Motors.

Maron said direct sales are banned in Utah, Connecticut, Michigan and Texas. The company has a particular interest in selling in Utah.

"It's a very entrepreneurial place, which is very innovative," Maron told reporters outside court. "I think it's wrong we can sell in China and not in Utah."

Tesla lobbied the Utah State Legislature to get the law changed, but their efforts faced push back from other auto dealers. (The Utah Auto Dealers Association did not immediately have a comment on Monday's hearing.) Tesla attorneys faced questions from the justices about creating "Tesla Motors of Utah," a subsidiary used to sell cars in the state.

Justice Deno Himonas questioned the underlying intent of the law.

"They're not franchising to anybody is the point. It's not McDonalds franchises," he said. "Tesla's not selling franchises. It's Tesla directly."

The Utah Attorney General's Office, representing the Utah State Tax Commission, argued that laws prohibiting manufacturer-direct sales protect consumers, allowing for competitive pricing for cars.

"It leads to the efficient purchase through dealer financing and trade-in options," said Deputy Utah Solicitor General Stanford Purser. "It leads to competitive and efficient car maintenance and repair services."

The five justices of the Utah Supreme Court questioned the effectiveness and point of the law, and whether it even explicitly forbade direct sales.

"I don't know that I see anything in the Utah statutes that would bar direct sales by the manufacturer," Justice Thomas Lee said.

Purser argued that the law was clear that manufacturer-direct sales are prohibited under the laws. Tesla insisted Utah law does not ban manufacturer-direct sales, but was set up to protect dealerships from facing direct competition from their car-makers.

Rep. Kim Coleman, R-West Jordan, who ran a pair of bills that would have carved a path for Tesla sales, was in court Monday. She told FOX 13 she did not anticipate running any future legislation on the issue, waiting to see what the court does.

The Utah Supreme Court took the case under advisement and is expected to issue a ruling within a year.

"Ultimately, neither the Department of Commerce nor the State Tax Commission have the final word on the meaning of the statute," Justice Christine Durham said in court. "Ultimately, this court does."