The largest maker of electric vehicles in the United States is suing the state of North Dakota to open a pair of car dealerships in Bismarck and Fargo.
The lawsuit filed by Tesla is in the hands of South Central Judicial District Judge Bonnie Storbakken after a hearing Monday.
North Dakota law prohibits vehicle manufacturers from owning car dealerships and requires them to sell their products to franchised dealerships for resale to consumers. Tesla, unlike traditional vehicle manufacturers like Ford or Chevrolet, operates its own car dealerships and sells directly to consumers.
Tesla is asking the court to declare that the company does not fall within the definition of a manufacturer under state law. The term is defined as a person who assembles or imports a motor vehicle and sells it to dealers in the state for resale.
If the court disagrees and Tesla is determined to be a manufacturer under state law, the company is asking the court to determine whether an exception to the law applies to their case.
“Tesla only wants to be able to sell its vehicles in North Dakota, and not force customers who want to buy a Tesla vehicle to drive to Minnesota or another state,” said Ari Holtzblatt, an attorney for Tesla.
Court documents filed by the company say more than 800 Tesla vehicles are registered in North Dakota. Those vehicles were purchased elsewhere, in more than 30 states Tesla is licensed to operate as dealers, because they are not available for sale in North Dakota.
Assistant Attorney General Michael Pitcher argued that Tesla is asking the court to create a third class of entities other than carmakers and franchised dealerships that sell to consumers, something the legislature never intended when it wrote the law.
“Tesla’s interpretation would allow any manufacturer to avoid the law by choosing not to franchise its dealers,” Pitcher said. “It would defeat the entire regulatory structure adopted by the Legislature.”
Tesla’s business model is a voluntary decision by the company to sell directly to consumers, Pitcher said. The attorney argued that the practice is prohibited by North Dakota law, and that Tesla has the power to change how it operates to comply with North Dakota’s regulations.
“Tesla can do the same thing in North Dakota that other manufacturers do. They can hire dealers, they can enter into franchise agreements, and they can sell through them,” Pitcher said. “So the law isn’t taking away Tesla’s ability to do business. It’s just regulating the vehicle’s distribution model.”
A Tesla electric vehicle charging station is ready for use in Bismarck on February 19, 2024. (Photo by Michael Eckerling/North Dakota Monitor)
If the company wins the case, Tesla will not automatically receive the license for its two proposed dealerships. Holtzblatt said the court’s favorable decision will give the company an opportunity to reapply and convince the North Dakota Department of Transportation that it meets all other legal requirements for a dealership license.
Although the court disagreed with Tesla’s reading of the law, Holtzblatt said it would be helpful to resolve the situation sooner rather than later. The company initially applied for two dealership licenses on September 19, 2024.
“We’re anxious to get those legal questions resolved. Obviously we believe the statutes support the interpretation we’re proposing,” Holtzblatt said. “Honestly, if the court disagrees, we want to get that answer quickly so we can try to move the process forward.”
North Dakota is are lagging behind other states To adopt electric vehicles and build necessary infrastructure. There are five Supercharger locations for Tesla vehicles in North Dakota, according to the company’s website. of the US Department of Energy Website listings 277 charging ports for electric vehicles at 108 locations in the state, primarily along the east-west travel Interstate 94 and US Highway 2 corridors.
Storbakken took the matter under advisement and did not provide a timeline for when he might issue a decision.
North Dakota Monitor reporter Jacob Orledge can be reached at jorledge@northdakotamonitor.com.
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