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State appeals court sides with Tesla in dispute over dealerships

File photo | Jason Rosenbaum | St. Louis Public Radio
A Tesla owner from Illinois stands next to his vehicle at the state Capitol in 2014 as lawmakers were debating a measure that would have required the company to set up franchises.

The Missouri Court of Appeals has ruled that the electric car maker Tesla can be granted a license to sell cars in the state.

A three-judge panel ruled Tuesday that the association representing Missouri car dealers did not have the right to sue Tesla, and dismissed the case. The ruling means Tesla can apply to renew licenses for its two Missouri stores, and potentially expand across the state.

The case started in April 2013, when the Missouri Department of Revenue gave Tesla the right to open its dealership in University City. The next year, the company got a license for a dealership in Kansas City. Unlike other car companies, Tesla sells the vehicles directly to customers instead of through franchises.

The Missouri Auto Dealers Association sued in January 2015, claiming the arrangement violated state law. A Cole County judge agreed and ordered Tesla to stop selling cars when the licenses for the two dealerships expired at the end of 2016. The company was later allowed to re-open the stores, and has been selling vehicles as the case makes its way through the court system.

In an emailed statement, a Tesla spokesperson called the decision a “victory for Missouri consumers who want the choice to learn about and purchase their Tesla in their home state.” The auto dealers did not return a request for comment

Follow Rachel on Twitter: @rlippmann

Rachel is the justice correspondent at St. Louis Public Radio.