Tesla Motors Inc., a California-based maker of battery powered vehicles, opened a dealership in the Richmond area of Virginia in mid-2017 after over a year of disputes with the Virginia Automobile Dealers Association (VADA).
After the store’s successful opening, the court has allowed for a case to open that will challenge the legitimacy of the new location.
The Virginia Court of Appeals recently announced a decision that enables a legal challenge to proceed in Richmond Circuit Court regarding the new Tesla store. The appeals court has expressed that it lacks jurisdiction needed to overturn the circuit court’s decision supporting VADA’s legal stance on the matter.
VADA is a powerful trade group that represents independent auto dealers in the state.
The decision to allow Tesla to open a dealership in Henrico County came from Virginia DMV Commissioner Richard Holcomb in late 2016.
Soon after, VADA opposed Tesla’s application to open the store, and the association appealed Holcomb’s ruling to Richmond Circuit Court.
VADA’s reasoning behind its opposition argued that Tesla must sell its vehicles through independent franchise dealers, as other car makers are required to do according to Virginia state law. Holcomb’s initial decision went against one of the DMV hearing officer’s recommendation to deny Tesla’s application.
Tesla primarily sells cars online and directly to customers at its stores. Therefore, company executives argued their business model would make it impossible for them to sell their cars through independent dealers and maintain profitability.
The Tesla store in Henrico County officially opened in August of 2017 and is located at 9850 W. Broad St. despite the pending court challenge issued by VADA.
Early proceedings of the Richmond Circuit Court case had lawyers from both Tesla and the VA DMV argue that VADA lacked the legal standing needed to effectively challenge Holcomb’s decision because the trade group is not affiliated with the auto business itself. They also raised the point that VADA doesn’t have any direct financial interest within the case.
The Richmond Circuit Court Judge, Gregory L Rupe, ruled that VADA was indeed an “aggrieved part” that was eligible to appeal the decision made by the DMV. Tesla and the DMV then appealed that ruling soon after.
Don Hall, the president and chief executive officer of VADA, expressed content with the appeals court ruling last Tuesday.
“We look forward to the circuit court’s consideration of the substance of the case after this delay for Tesla’s procedural objections (that were) found to be without merit by the court of appeals,” Hall said.