Tesla Motors, the Virginia Department of Motor Vehicles and the Virginia Automobile Dealers Association reached an agreement late last week to allow the automaker to apply for a single dealership license, VADA CEO Don Hall said today .
Tesla agreed to withdraw a lawsuit it filed after the Virginia Department of Motor Vehicles rejected Tesla's bid for a dealership license for its store in the Washington, D.C., suburb of Tyson's Corner, Va.
The automaker now needs to get approval from the Virginia Motor Vehicle Dealer Board, the state regulatory agency that oversees dealers in the state, before it can begin selling vehicles in Virginia.
Hall couldn't comment on the details of the deal because the agreement was made under a court seal, he said.
"It's a matter of lots of compromise on everybody's part," Hall said. "Nobody is getting exactly what they want."
The electric vehicle maker wants to eschew franchised dealerships and sell its cars directly to consumers, but dealer franchise laws in many states prohibit or limit factory sales.
As Tesla has grown its network of retail stores, a number of states have moved to tighten those restrictions on direct sales.
Virginia DMV Commissioner Richard Holcomb had rejected Tesla's request to open its own store in April. State law allows factory-owned stores if no independent dealer is available to operate the store, but Holcomb said there wasn't clear evidence that the exception was applicable.
The Virginia Motor Vehicle Dealer Board has yet to receive Tesla's application, Bruce Gould, the board's executive director, said. Gould said it typically takes a new dealership about two weeks to get approval.
"They've rented a location, they're paying rent, they want to get rolling and we want to get them rolling," Gould said of the board's regulation process.
A Tesla spokeswoman confirmed that the company had reached an agreement with the Virginia dealers' group and state Department of Motor Vehicles. She said Tesla plans to apply for a license to open a store in northern Virginia, but declined to say when it would do so.
"We are encouraged by the settlement and look forward to seeking a license to open a store and an associated service facility in Northern Virginia," said an e-mailed statement from the automaker.
Tesla's Tyson's Corner store was initially scheduled to open in late 2012, but ended up opening its doors this spring as a gallery -- showing cars but not selling them. Tesla CEO Elon Musk told Automotive News in April that he was frustrated about the slow progress in getting the store there running.
"I'm pretty upset about the Virginia store," he said at the time.
Earlier this year Tesla blocked dealer-backed legislation in New York and North Carolina that would've limited its ability to sell cars directly to consumers. A law enacted this year in New Hampshire also permitted the automaker to open stores there.
Tesla lost a highly publicized legislative bid this year to change dealership franchise laws in Texas. According to the National Automobile Dealers Association, 48 states have restrictions to factory-owned dealerships.