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Tesla Sues Michigan State Officials In Federal Court

Tesla Sues Michigan State Officials In Federal Court
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Tesla Motors Inc (NASDAQ: TSLA) could be finding itself in the eye of a storm, as it steps on the pedal of its fight with state officials over its quest to sell its electric vehicles directly to customers.

The Case

Tesla, according to reports in the Detroit Free Press, has filed a lawsuit in federal courts against Michigan Secretary of State Ruth Johnson, Michigan Attorney General Bill Schuette and Gov. Rick Snyder for disallowing it to sell its vehicles directly to consumers.

The Case History

In the fall of 2015, Tesla had applied to the state of Michigan for the license to open a retail gallery in Grand Rapids. Since then, the company has been waging battle without success. Michigan's intransigence in the issue is due to the fact that the state has laws prohibiting sales of vehicles directly by consumers. The sale should be routed through an authorized dealer.

Related Link: Tesla Shares Sell Off Amid Investor Concerns Of Massive Discounts

With the state asking the California-based electric vehicle maker to provide the proof that it is a franchised dealer, Tesla has been unable to produce such proof. According to a final decision early this month, the state clamped its foot down, leaving Tesla in a lurch.

Tesla's Argument

Tesla contended that the state's rejection of its application is a clear violation of the Due Process, Equal Protection and Commerce Clauses of the Constitution. The company is now seeking injunction to prevent the state officials from enforcing the law, including a law named the anti-Tesla bill that was signed in October 2014.

Tesla is hell-bent on its intention, and it looks like the company would go to any extent to receive clearance to sell its high-end battery-powered cars directly to consumers without a franchised dealer.

At time of writing, shares of Tesla were up 0.63 percent at $206.51.

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