Tesla Takes North Dakota to Court Over Direct Sales Restrictions

Tesla Inc. has taken the state of North Dakota’s Department of Transportation to court over a law that prohibits automakers from directly selling vehicles to customers within the state. The lawsuit was filed in August after the state denied Tesla’s application to open showrooms in Fargo and Bismarck.

Tesla’s Argument

Tesla argues that it is exempt from the law as it does not sell vehicles to franchise dealerships, and therefore does not meet the state’s definition of a vehicle manufacturer. A hearing for the case is scheduled to take place in December at the South Central District Court.

Background

This is not the first time Tesla has faced off against a state over direct sales restrictions. In 2022, the company filed a lawsuit against the state of Louisiana in an effort to sell vehicles directly to customers.

Current Challenges

The news of the lawsuit comes amid a decline in Tesla’s sales, particularly in Europe and China. In October, the company reported a three-year low in the Chinese market, with deliveries of the Model Y and Model 3 totaling 61,497 units, representing a 9.9% decline. Additionally, a Tesla showroom in France recently experienced a major fire incident, resulting in the destruction of 24 vehicles.

Sales Performance

Tesla’s sales in Europe have also been lackluster, with a 36.3% year-over-year decline in October. The company also reported a 10.5% decline in European sales in September.

Price Action

Tesla’s stock price jumped 0.30% to $410.13 during after-hours trading, following a 1.13% increase to $408.92 at the end of the regular trading session.

Conclusion

The lawsuit against North Dakota’s Department of Transportation is just one of the challenges Tesla is currently facing. As the company navigates the complexities of direct sales restrictions, it must also contend with declining sales and other obstacles.

Photo

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