Virginia Okays Tesla-Owned Dealership

Virginia’s Dept. of Motor Vehicles has reversed an earlier ruling and will allow Tesla Motors Inc. to open a factory-owned dealership and a service center in Richmond, Automotive News reports.

Tesla, which applied in 2012 for a license to operate sales outlets in Virginia, was turned down in September. The department cited the state’s franchise laws, which prohibit a carmaker from competing with its own dealers.

In its appeal, Tesla successfully argued for an exception because it has no franchised dealers. DMV Commission Richard Holcomb agrees. He says it would be “unreasonable and not in the public interest” to bar the company from dealing directly with its customers, according to AN. Holcomb adds that inserting a third-party dealer between the company and its customers “could possibly create distance from Tesla’s already proven successful concept.”

The Virginia Automobile Dealers Assn., which strongly opposes Tesla's approach as a direct threat to the franchise system, is likely to fight the state's decision. Tesla faces similar challenges in several other states.