Tesla Inc. can continue to operate its store in suburban Richmond, Va., after a local judge ruled in the automaker's favor in a dispute with the Virginia Automobile Dealers Association.
According to court documents filed Friday, Judge Gregory Rupe of Richmond Circuit Court affirmed a 2016 decision by Virginia Department of Motor Vehicles Commissioner Richard Holcomb allowing Tesla to open a store in Henrico County. The judge also had concerns about the commissioner's decision.
The dealer association opposed Tesla's petition, arguing that it violated Virgina law prohibiting any motor vehicle manufacturer from owning or operating a dealership except under certain circumstances. The dealer association appealed Holcomb's decision to Richmond Circuit Court.
The law at issue says an auto manufacturer must sell its vehicles through independent dealerships in Virginia unless no dealership is available in a community that can do so "in a manner consistent with the public interest."
Tesla has argued that its direct-to-consumer business model means no independent dealer could sell its cars profitably, and therefore no dealer could do so in a manner consistent with the public interest.
A Tesla spokeswoman wrote in an email Monday, "We are pleased the Richmond Circuit Court ruled in Tesla's favor and upheld the DMV commissioner's decision to allow Tesla to sell its vehicles at its Richmond area store.
"The ruling is a win for consumers who are increasingly looking to purchase electric vehicles. We look forward to continuing to serve our customers and grow our business across the commonwealth."
Rupe's ruling upheld Holcomb's decision, but the judge noted concerns about the evidence presented in the case. Rupe said the Virginia law "gives broad discretion to the commissioner," and the court may "reverse the commissioner only when he acts arbitrarily or capriciously.
"Although this court disagrees with his [Holcomb's] analysis, it has no doubt that the commissioner felt that he is serving the best interests of the people of this commonwealth," Rupe wrote. "And, the commissioner's decision is supported by the evidence in this record."
Additionally, Rupe wrote that he is "troubled by the implications of the Tesla business model," which he said is "structured in such a way that no independent dealer could ever become profitable."
Tesla's business model "serves to ensure that Tesla retains complete control over their vehicles from their construction to their sale," Rupe wrote.
The Virginia Automobile Dealers Association did not respond to requests for comment.
