Tesla is challenging Wisconsin’s long-standing ban on direct vehicle sales yet again, arguing that the state’s restrictive dealership laws are outdated and anti-competitive. The automaker has filed a petition in Outagamie County Circuit Court after its bid to open up to four direct-sale dealerships in the state was denied by an administrative judge. Now, Tesla is seeking to overturn the decision or at least secure a fresh hearing.
Wisconsin’s Restrictive Dealer Laws Keep Tesla Out
Wisconsin remains one of the few states where Tesla buyers cannot purchase vehicles directly from the company. Instead, they must travel to neighboring states like Illinois or Minnesota to complete their transactions. The restriction stems from Wisconsin’s “factory store” law, which prohibits vehicle manufacturers from owning and operating dealerships. The law is designed to prevent automakers from competing directly with independent dealerships, a model that has existed for decades and remains deeply entrenched in the automotive industry.
Tesla, which sells its vehicles through a direct-to-consumer model rather than traditional franchises, has long argued that such laws stifle innovation and hurt consumer choice. While 27 states have granted Tesla the ability to operate direct sales locations, Wisconsin continues to side with its powerful dealer associations, which argue that Tesla is not barred from selling in the state—it just cannot do so in its preferred manner.
Tesla’s Legal Challenge and the State’s Response
In March 2024, Tesla applied to convert its existing showrooms in Milwaukee and Madison into fully operational dealerships. It also expressed interest in opening two additional locations in Glendale and the Appleton area. However, the Wisconsin Department of Administration’s Division of Hearings and Appeals denied the request in October, a decision that was upheld by a state administrator in December. (via Post Crescent)
Tesla is now challenging that ruling, arguing that no independent dealer could meet its unique sales model requirements. The company maintains that its business structure—fixed pricing, online ordering, and no commissioned salespeople—renders the traditional dealership model impractical. Additionally, Tesla asserts that the state’s refusal to grant an exemption violates its economic liberty rights under the Wisconsin State Constitution.
The Wisconsin Department of Justice, meanwhile, has asked the court to affirm the state’s original decision, maintaining that Tesla has no legal basis to demand a special exemption. The Wisconsin Automobile & Truck Dealers Association (WATDA) has also intervened in the case, seeking to move the legal battle to either Dane County or Milwaukee County, where Tesla’s existing showrooms are located.
Tesla Fighting Dealer Laws Across The Country
Tesla’s push for direct sales in Wisconsin is part of a broader effort to dismantle outdated dealership protections nationwide. Across the U.S., 22 states either ban direct sales outright or impose strict limitations on how many stores manufacturers like Tesla can operate. The dealership lobby, which has enjoyed decades of legal protection, argues that automakers should be required to sell through independent dealers to ensure fair competition and consumer protection.
Tesla and other EV manufacturers, including Rivian and Lucid, counter that the dealership model adds unnecessary costs and complexity. The company points to the success of its direct-sales approach in other states, where consumers benefit from transparent pricing and a seamless purchasing process. Tesla has recentely has some success in states like Kentucky and Louisiana, but could be facing a setback in Washington State, where it is currently allowed to sell directly to the consumer.
What’s Next for Tesla in Wisconsin?
The Outagamie County Circuit Court will hold a procedural hearing on March 24 to determine whether Tesla’s case will proceed or if the venue will be changed. If the court rules in Tesla’s favour, it could open the door for new dealerships in the state. On the other hand, if the court upholds the denial, Tesla will have to consider further appeals or lobbying efforts to change Wisconsin law.
