The Virginia department of motor vehicles ruled yesterday that Tesla is eligible to open a second retail store in Virginia, in the state capitol of Richmond.

Virginia franchise laws prevent automakers from operating their own dealerships, but the state's Department of Motor Vehicles can grant special dispensation to companies that have no franchised dealers in the state.

The state's franchised car dealers continue to view that as a threat; the Virginia Automobile Dealers Association (VADA) worked hard to make a case against the Silicon Valley automaker.

DON'T MISS: VA may deny Tesla a store license; dealers say they want to sell Teslas

Tesla—which has no franchised dealers anywhere—was granted one of the special licenses in December 2013 for its first Virginia retail store in McLean.

As the Virginia DMV neared its deadline for a decision on the second store, VADA president Don Hall tried to get dealers riled up about that possibility, according to The Washington Post.

In a video distributed to dealers earlier this fall (posted to YouTube but since removed), Hall said the current franchise system is "under attack by the likes of Tesla and many others out there" who believe the system is outdated.

Tesla store under construction, Van Ness Ave, San Francisco [photo: BlueStarE3 on Tesla Motors Club]

Tesla store under construction, Van Ness Ave, San Francisco [photo: BlueStarE3 on Tesla Motors Club]

Tesla's current operating retail store in Virginia lies in the affluent neighborhood of Tysons Corners, close to Washington, D.C.

The new store would be located in or around the capital city of Richmond.

The VADA has aggressively fought Tesla's plans for a second store since the automaker applied for a license earlier this year.

ALSO SEE: Virginia dealers double down on Tesla attack, demand probe of sales

In March, the dealer lobby filed a lawsuit alleging that both Tesla and the Virginia DMV engaged in a "conspiracy" to hide the opening of the store.

The suit argued that a hearing to evaluate Tesla's request for the store was set up hastily, in a manner meant to limit any opposition.

In May, the VADA sent a letter to the Virginia Motor Vehicle Board, demanding an investigation into Tesla's sales practices.

Tesla Store, Palo Alto

Tesla Store, Palo Alto

The group even argued that its members would be willing to sell Tesla electric cars although, given Tesla's policy of selling exclusively through its own retails stores and website, it is unlikely automaker would have taken them up on that offer.

Daniel Small, who was appointed by the DMV to oversee the months-long series of hearings related to the Tesla store, recommended against approving it in September.

But Virginia DMV Commissioner Richard Holcomb reversed that September ruling.

MORE: VA auto dealers sue Tesla, DMV over hearing to 'hide' proposed store

He wrote, “I believe it would be unreasonable and not in the public interest to require the removal of that relationship—Tesla to Tesla’s customers—and require the interjection of a third party which could possibly create distance from Tesla’s already proven successful concept."

Had the decision not gone its way, Tesla could have appealed, as it did in the 2013 case that resulted in approval for its own retail store. It could also lobby the Virginia legislature to change franchise laws, as the company has done in other states.

Tesla must still get a second license from the state's Motor Vehicle Dealer Board, and its opponents can appeal the DMV commissioner's ruling.


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