Tesla Motors Inc. notched a victory in the ongoing battle with states over dealership franchise laws.
In a decision released Wednesday, Richard Holcomb, commissioner of Virginia’s Department of Motor Vehicles, reversed a September ruling denying Tesla a dealership license to operate a store in Richmond.
Tesla filed an exception to the original decision, stating that its direct-to-consumer sales model does not apply to Virginia law because it does not compete with existing franchised dealerships -- since the automaker does not use them -- and there is no dealership in the state capable of operating a Tesla franchise.
“I believe it would be unreasonable and not in the public interest to require the removal of that relationship -- Tesla to Tesla’s customers -- and require the interjection of a third party which could possibly create distance from Tesla’s already proven successful concept,” Holcomb wrote.
Prior to the latest decision, Tesla faced a number of legal obstacles to open stores in the state. In 2012, the electric-vehicle maker applied for a license to open a store in northern Virginia and was denied by Holcomb. Tesla appealed, and ended up entering into an agreement with the Virginia Automobile Dealers Association that allowed it to obtain a license to open a gallery.
Since the agreement, the VADA has claimed that Tesla has violated numerous state laws by offering test drives and discussing vehicle prices, which it is not allowed to do in gallery locations. On Monday, VADA President Don Hall released a video on Youtube -- which has since been taken down -- saying Tesla’s direct-sales model was a threat to dealerships.
“It’s a real fight. It’s a serious fight,” Hall said. “Let’s all strap on whatever it takes to win and let’s win this fight to protect the franchise system.”
In response to the decision, Hall said the VADA was considering further action, including filing an appeal. He also claimed that Tesla used “political backchannels” to receive a favorable ruling.
Holcomb’s reversal “tosses aside all prior legal decisions out of his agency to arrive at a politically-motivated decision,” Hall wrote in a statement.
With Wednesday's ruling, which will allow Tesla to open a store and a second service center in the state, the automaker said it will begin construction “swiftly.”
“This decision will allow Richmond-area consumers to learn about and purchase their Tesla vehicles in closer proximity to their homes,” Tesla said in a statement.
Despite the victory in Virginia, Tesla continues to fight for the right to sell directly to consumers in other states. States such as Texas, Iowa and Michigan have banned Tesla stores, though the company does operate galleries in Texas. In September, Tesla filed a lawsuit in federal court against Michigan over its direct-sales ban.