Tesla Takes Wisconsin to Court, Demands to Open Dealerships

Tesla Cybertruck Foundation Series. Photo by Mr.choppers, (CC BY-SA 3.0), via Wikimedia Commons

Tesla Inc. is challenging the state in court over a decision blocking it from opening dealerships in Wisconsin.

Last year, the electric car company led by Elon Musk applied for dealer licenses to sell its vehicles. The state denied the request in December, saying Tesla did not qualify for an exemption to a state law prohibiting manufacturers from owning dealerships.

On Jan. 15, Tesla filed a petition for a judicial review of the decision in Outagamie County Circuit Court. The company asked the court to overturn the state’s decision or order a new hearing on Tesla’s request.

It comes after Tesla posted its first annual sales drop in more than a decade last year. In California, the nation’s largest electric vehicle market, the company’s sales fell by around 12 percent last year. Tesla is also seeing a sales slump in Europe to start this year.

According to the company’s court filings, more than 13,000 Tesla vehicles are registered in the state. Tesla estimates it sold between 3,000 and 4,000 electric vehicles to Wisconsin customers last year, and believes those sales would grow if it opened dealerships in the state.

The company operates two “non-sales galleries” in Milwaukee and Madison, and its sales to Wisconsin customers typically happen in Illinois or Minnesota, court documents said. Tesla did not immediately respond to a request for comment.

There has been debate in the past about tweaking state law to allow Tesla to open dealerships in Wisconsin. State lawmakers discussed such a proposal in 2018. An amendment to the 2019 state budget would have allowed electric-vehicle manufacturers without existing franchise agreements to engage in direct-sales, but was vetoed by Gov. Tony Evers.

Last March, Tesla submitted a request to the Department of Transportation for dealer licenses to open dealerships in Madison and Milwaukee, with plans for additional dealerships in Glendale and the Fox Cities.

Tesla argued state law allows manufacturers to operate their own dealerships if there’s no independent dealer available to operate those locations that meets the manufacturer’s standards.

“Tesla’s Wisconsin customers prefer Tesla’s uniform retail pricing and transparent, middleman-free car-buying experience,” Tesla’s petition reads. “As a result, an unaffiliated dealer cannot meet Tesla’s uniformly applied standard qualifications.”

The company also argued Wisconsin law does not ban “a non-franchising manufacturer like Tesla” from operating a dealership.

Tesla’s application was sent to the Department of Administration. The Wisconsin Automobile and Truck Dealers Association was allowed to intervene in the case, which was opposed by Tesla, court documents said.

Tesla and the auto dealers association both presented witnesses to the state during a hearing on the request in May 2024, the petition for judicial review states. The state DOT did not participate in the hearing.

The administrative law judge handling the case issued a proposed decision denying Tesla’s application in October, and Tesla provided its objections to the state later that month, court documents said.

The company filed an open records request the following month seeking communications pertaining to its case between the officials handling it. According to Tesla’s petition, the response to the request showed the administrative law judge shared the draft decision with state administrators before sharing it with parties involved in the case.

Tesla submitted additional objections to the state on Dec. 4. The company argues it was “deprived both of an independent hearing, and of a meaningful review of the (administrative law judge)’s decision, insofar as the Administrator had already reviewed and prejudged the case.”

The state issued its final decision on Dec. 17, denying Tesla’s application to operate dealerships.

Brian Hayes, administrator for the Wisconsin Department of Administration’s Division of Hearings and Appeals, wrote in the decision that Tesla did not show that no independent dealers are available to own and operate a Tesla dealership that meets the manufacturer’s standards.

“Independent dealers testified that they were willing and able to sell Tesla vehicles consistent with Tesla’s standard sales and pricing model,” Hayes said. “Each of the independent Wisconsin licensed dealers who testified hold franchise agreements with various vehicle manufacturers to sell and service vehicles.”

In its petition to the court, Tesla argues the auto dealers association was an “improperly admitted party” and that the state’s decision “rested entirely” on evidence from the association.

The state Department of Transportation and Department of Administration did not respond to requests for comment. In a court filing responding to Tesla’s petition, attorneys for the state said the company is not entitled to relief through the court, and asked the court to enter an order affirming the decision.

The Wisconsin Automobile and Truck Dealers Association declined to comment on an ongoing court case. The association filed a motion to move the case to either Milwaukee or Dane County because that’s where Tesla has galleries.

In a legal brief, the association said Tesla formally applied for dealerships at those sites with the intention of converting the galleries into dealerships and planned to later apply for dealerships in Glendale and the Fox Valley.

“To date, Tesla has not submitted an application to open a dealership anywhere in Outagamie County,” the brief reads.

A motion hearing is scheduled for next month in the Outagamie County Government Center.

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Tesla takes Wisconsin to court over blocking it from opening dealerships in the state was originally published by Wisconsin Public Radio.