A Tesla is parked in downtown Bismarck on April 13, 2026. Tesla is suing the state of North Dakota over a law that the Department of Transportation cited to reject the company’s application to open a pair of dealerships in the state. (Photo by Amy Dalrymple/North Dakota Monitor)
BISMARCK, N.D. (North Dakota Monitor) – The largest manufacturer of electric vehicles in the United States is suing the state of North Dakota in its quest to open a pair of car dealerships in Bismarck and Fargo.
The case, filed by Tesla, is in the hands of South Central Judicial District Judge Bonnie Storbakken after a hearing on Monday.
North Dakota law prohibits vehicle manufacturers from owning car dealerships and requires them to sell their products to franchised dealerships for resale to consumers. Tesla, unlike producers of conventional vehicles like Ford or Chevrolet, operates its own car dealerships and sells directly to consumers.
Tesla is asking the court to declare the company does not fall within the definition of manufacturer contained in state law. The term is defined as a person who assembles or imports a motor vehicle and sells it to dealers in the state for resale.
If the court disagrees and Tesla is determined to be a manufacturer under state law, the company is asking the court to determine whether an exception in the statute applies to their case.
“Tesla just wants to be able to sell its vehicles in North Dakota, and not force customers who would wish to purchase a Tesla vehicle to have to drive to Minnesota or another state to do it,” said Ari Holtzblatt, one of Tesla’s attorneys in the case.
Court documents filed by the company said there are more than 800 Tesla vehicles registered in North Dakota. Those vehicles were purchased elsewhere, in one of the more than 30 states Tesla is licensed to operate as a dealer, because they are unavailable for sale in North Dakota.
Assistant Attorney General Michael Pitcher argued Tesla is asking the court to create a third category of entities, beyond car manufacturers and franchised dealerships that sell to consumers, that the Legislature never intended when it wrote the law.
“Tesla’s interpretation would allow any manufacturer to avoid the statute simply by choosing not to franchise its dealers,” Pitcher said. “That would defeat the whole regulatory structure that the Legislature has adopted.”
Tesla’s business model of selling directly to consumers is a voluntary decision by the company, Pitcher said. The attorney argued that practice is barred by North Dakota law, and Tesla has the power to change how it operates in order to comply with North Dakota’s rules.
“Tesla can operate in North Dakota the same way that every other manufacturer does. They can appoint dealers, they can enter into franchise agreements, and they can sell through that,” Pitcher said. “So the statute is not taking away Tesla’s ability to do business. It’s just regulating the distribution model of vehicles.”
Tesla would not automatically receive licenses for its two proposed dealerships if the company prevails in the case. Holtzblatt said a favorable ruling by the court would allow the company to reapply and give it the opportunity to convince the North Dakota Department of Transportation it meets all the other legal requirements for a dealership license.
Even if the court disagrees with Tesla’s reading of the law, Holtzblatt said it would be helpful to have a resolution on this situation sooner rather than later. The company had initially applied for the two dealership licenses on Sept. 19, 2024.
“We’re kind of anxious to get resolution on those legal questions. Obviously we believe that the statutes favor the interpretation we’ve offered,” Holtzblatt said. “Honestly, if the court disagrees, we just as soon like to get that answer so we can try to move the process forward.”
North Dakota has lagged behind other states in adopting electric vehicles and building the necessary infrastructure. There are five supercharger locations for Tesla vehicles in North Dakota, according to the company’s website. The U.S. Department of Energy’s website lists 277 charging ports for electric vehicles at 108 locations in the state, primarily along the Interstate 94 and U.S. Highway 2 corridors traveling east-west.
Storbakken took the matter under advisement and did not provide a timeline for when she may issue a decision.
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