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Tesla Takes North Dakota to Court Over Direct Sales Restrictions

MarketDash Editorial Team
20 days ago
Tesla is suing North Dakota's transportation department after the state denied applications for showrooms in Fargo and Bismarck, citing a law that blocks automakers from selling vehicles directly to consumers.

Another State, Another Fight

Tesla Inc. (TSLA) is taking North Dakota to court, and the reason is pretty straightforward: the state won't let the company sell cars the way it wants to. The automaker filed a lawsuit in August after North Dakota's Department of Transportation denied applications for Tesla showrooms in Fargo and Bismarck, according to court filings obtained by the Bismarck Tribune on Friday.

The issue? North Dakota has a law prohibiting automakers from selling vehicles directly to customers within the state. Tesla's business model, of course, revolves entirely around direct sales—no franchise dealerships, no middlemen. So the company is making an interesting legal argument: it claims it's exempt from the law precisely because it doesn't sell through franchises, which means it doesn't technically meet the state's definition of a vehicle manufacturer.

A hearing is scheduled for December before the South Central District Court, where this logic will be put to the test. It's worth noting this isn't Tesla's first rodeo with state-level sales restrictions. The company filed a similar lawsuit against Louisiana back in 2022, also seeking the right to sell directly to customers.

Trouble Beyond the Courtroom

The legal fight in North Dakota comes at a challenging time for Tesla. The automaker is dealing with declining sales in two crucial markets: Europe and China. In October, Tesla hit a three-year low in China, delivering 61,497 units of the Model Y and Model 3 (including exports)—a 9.9% decline.

Europe hasn't been much better. Tesla's sales across multiple key European countries dropped 36.3% year-over-year in October, following a 10.5% decline in September. That's the kind of trajectory that gets attention in earnings calls.

And then there's the showroom fire in France. Twenty-four Tesla vehicles were destroyed in a parking lot blaze at a French showroom, and authorities are investigating the possibility of arson. Not exactly the kind of headline the company needs right now.

The Numbers

Price Action: TSLA jumped 0.30% to $410.13 during after-hours trading after it surged 1.13% to $408.92 at the end of the regular trading session, according to market data.

Back to News

Tesla Takes North Dakota to Court Over Direct Sales Restrictions

MarketDash Editorial Team
20 days ago
Tesla is suing North Dakota's transportation department after the state denied applications for showrooms in Fargo and Bismarck, citing a law that blocks automakers from selling vehicles directly to consumers.

Another State, Another Fight

Tesla Inc. (TSLA) is taking North Dakota to court, and the reason is pretty straightforward: the state won't let the company sell cars the way it wants to. The automaker filed a lawsuit in August after North Dakota's Department of Transportation denied applications for Tesla showrooms in Fargo and Bismarck, according to court filings obtained by the Bismarck Tribune on Friday.

The issue? North Dakota has a law prohibiting automakers from selling vehicles directly to customers within the state. Tesla's business model, of course, revolves entirely around direct sales—no franchise dealerships, no middlemen. So the company is making an interesting legal argument: it claims it's exempt from the law precisely because it doesn't sell through franchises, which means it doesn't technically meet the state's definition of a vehicle manufacturer.

A hearing is scheduled for December before the South Central District Court, where this logic will be put to the test. It's worth noting this isn't Tesla's first rodeo with state-level sales restrictions. The company filed a similar lawsuit against Louisiana back in 2022, also seeking the right to sell directly to customers.

Trouble Beyond the Courtroom

The legal fight in North Dakota comes at a challenging time for Tesla. The automaker is dealing with declining sales in two crucial markets: Europe and China. In October, Tesla hit a three-year low in China, delivering 61,497 units of the Model Y and Model 3 (including exports)—a 9.9% decline.

Europe hasn't been much better. Tesla's sales across multiple key European countries dropped 36.3% year-over-year in October, following a 10.5% decline in September. That's the kind of trajectory that gets attention in earnings calls.

And then there's the showroom fire in France. Twenty-four Tesla vehicles were destroyed in a parking lot blaze at a French showroom, and authorities are investigating the possibility of arson. Not exactly the kind of headline the company needs right now.

The Numbers

Price Action: TSLA jumped 0.30% to $410.13 during after-hours trading after it surged 1.13% to $408.92 at the end of the regular trading session, according to market data.