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    Tesla Sues to Sell Cars Directly to Consumers in Louisiana

    Tesla Inc.

    TSLA -1.14%

    has filed suit to challenge a Louisiana law it says restricts its ability to sell electric vehicles directly to customers and violates its constitutional rights.

    The lawsuit filed last week in the U.S. District Court for the Eastern District of Louisiana is the latest action by Tesla to try to open markets to its model of selling cars directly to consumers rather than using dealers as intermediaries. Tesla argues the state law, among other things, infringes on interstate commerce.

    The electric-vehicle maker is suing the Louisiana Automobile Dealers Association, multiple officials on the Louisiana Motor Vehicle Commission and some dealerships in the state, which Tesla says conspired to bring the current laws and regulations into place.

    “Louisiana consumers’ freedom is being unduly restricted by protectionist, anticompetitive, and inefficient state regulation and laws,” Tesla said in the lawsuit. The company didn’t immediately respond to a request for comment.

    The Louisiana Automobile Dealers Association and the Louisiana Motor Vehicle Commission didn’t immediately respond to requests for comment.

    The state ban against selling vehicles directly to consumers went into effect in 2017. Such types of laws were first brought about in the 1950s to stop stores from being arbitrarily shut down by manufacturers. In recent years, they have been used by dealer lobbyists and some car makers who say all stores should be independently owned.

    Empty dealer lots, above-sticker prices and online sales—supply-chain issues and a shift toward electric vehicles have accelerated changes in the car-buying process. We visit a car dealer to see how consumers and sellers are adapting and what changes might be here to stay. Photo: Adam Falk/The Wall Street Journal

    The franchise laws and other efforts that protect dealers from competition from car makers have been an issue for Tesla for years. The car maker filed a similar lawsuit in Michigan in 2016 after the state denied the company a license to open a store to sell directly to consumers. The state and Tesla settled their dispute, enabling direct sales by the car maker to in-state customers.

    As Tesla has grappled with local restrictions, it has found ways to put its vehicles into customers’ hands. In Texas, for example, it has so-called galleries where potential customers can learn about its cars but those buyers must go online to actually purchase a vehicle. In Louisiana, Tesla said, customers were going out of state to buy its vehicles after the state’s move in 2017 to bolster franchise laws that effectively banned direct sales.

    Tesla is also claiming that the defendants in the Louisiana case, by citing the state law, have tried to prevent it from leasing cars and operating warranty repair shops that are meant to service the 3,000 Tesla vehicles currently registered in the state. Tesla disagrees with that interpretation of the law and has been involved in a separate legal battle with some of the defendants over the issue.

    Auto makers with long-established dealership networks are also rethinking their sales model when it comes to electric vehicles.

    General Motors Co.

    says dealers will only be shipped the number of Hummer electric pickup trucks that have been ordered by customers through its website. A few months back,

    Ford Motor Co.

    outlined plans for customers to order EVs online at a no-haggle price. The dealership would still be involved to deliver cars.

    Separately, the National Labor Relations Board on Monday ruled against Tesla in a case about whether workers could be required to wear shirts with the company’s logo to work, which effectively prevented them from being able to wear union-branded clothing. The board sided with employees, saying the Tesla company-branded clothing standard violated NLRB policy.

    The NLRB and Tesla have clashed before over unionization efforts at the car maker.

    Write to Meghan Bobrowsky at

    Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

    Appeared in the August 30, 2022, print edition as ‘Tesla Suit Aims at State Ban On Direct Car Deals.’



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