Tesla Challenges Louisiana Law To Directly Sell Cars To Customers

Tesla Inc TSLA is reportedly challenging a Louisiana law as it seeks to sell directly to customers.

What Happened: The Elon Musk-led automaker filed a lawsuit in the U.S. District Court for the Eastern District of Louisiana last week, reported the Wall Street Journal.

Tesla is reportedly suing the Louisiana Automobile Dealers Association, officials on the Louisiana Motor Vehicle Commission, and some dealerships.

“Louisiana consumers’ freedom is being unduly restricted by protectionist, anti-competitive, and inefficient state regulation and laws,” said Tesla in its lawsuit, according to the report.

The company claims that the defendants have tried to stop it from leasing cars and operating warranty repair shops aimed at servicing 3,000 Tesla vehicles registered in the Pelican State.

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Why It Matters: Tesla has found workarounds against state laws in instances where direct sales are restricted, noted the Journal.

In Louisiana, customers go out of the state to purchase Tesla cars due to a 2017 change to franchise laws, which effectively banned direct sales, according to the Journal.

In 2020, Tesla settled a lawsuit, dating back to 2016, in Michigan that allowed it to sell vehicles directly. Previously that state had tried to prevent Tesla’s direct sales.

The company has made efforts to push direct sales in Oklahoma and New York as well. 

Price Action: On Monday, Tesla shares closed 1.1% lower at $284.82 in the regular session and fell 0.4% in the after-hours trading, according to data from Benzinga Pro.

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