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Utah car dealers weighing in on Tesla court fight

July 24, 2016

SALT LAKE CITY (AP) — Car dealers in Utah are pushing back against Tesla’s court effort to sell its sleek electronic cars in the state.

State laws preventing carmakers from owning dealerships were set up to protect customers, and Tesla should have to follow them like everyone else, the Utah Auto Dealers Association said in court documents filed in an ongoing court battle between Tesla and the state.

Tesla is asking the Utah Supreme Court to reverse a state decision blocking it from selling new cars at its $3 million showroom in Salt Lake City.

Tesla contends it can’t sell through traditional dealers because its business model depends on convincing customers to choose the company’s technology over a traditional car, something that would be a conflict for dealers who also sell traditional cars.

The car dealers disagree and point to other types of electric cars, like the Nissan Leaf, that they sell already.

“Tesla builds a car. It has four wheels. You press a pedal with your foot to make it go, and you turn the steering wheel to change direction. That you plug it in rather than gas it up is a trifle,” attorneys wrote in court documents filed in late June.

They contend allowing Tesla to sell directly to customers would stifle competition, exactly what Utah car-sale laws are meant to prevent.

But Tesla says restricting the company protects a car-dealer monopoly and violates a free-market policy enshrined in the state constitution.

Utah laws banning carmakers from owning dealerships were designed to keep big automakers like GM from crowding out independent dealers who sell the same cars, but it doesn’t apply to Tesla because it has never sold through dealers, the automaker argues.

Tesla wants the high court to toss the filing from the car dealers, saying it comes too late in the company’s case against Utah.

The state is defending the decision to keep Tesla from selling new cars, arguing there are still regulations in a free market.

A proposal to change the law in Utah so Tesla could sell failed after the company pulled its support, saying the fix was too restrictive because it would have barred it from keeping any inventory in the state at a time when its gearing up to roll out the new, lower-priced Model 3.

The company decided to focus instead on the challenge before the Utah Supreme Court.

Tesla has faced similar roadblocks elsewhere, and Utah is one of a handful of states where it’s still fighting for full sales powers.