Investor's Corner

Tesla battles Utah in Supreme Court over right to sell direct

Published

8 years ago

November 7, 2016

Gene

Red Tesla Model S parked in front of the Utah Capitol [Credit: Francisco Kjolseth | Tribune file photo]

Tesla has taken its fight against Utah, a state that bars the Silicon Valley automaker from selling its vehicles direct to consumers, to the state’s Supreme Court. Tesla says the state’s dealership laws are not applicable to the company’s sales model.

The company’s troubles in Utah are similar to those it faces in other key states such as North Carolina, Texas, Michigan, and Connecticut, where the company continues to face opposition from traditional dealer associations.

“Our position is we should be able to sell completely directly,” said Todd Maron, general counsel for Tesla Motors. Maron adds that Tesla has a particular interest in selling in Utah because the state is known to be a “very entrepreneurial place” and “very innovative,”. “I think it’s wrong we can sell in China and not in Utah.” says Maron in speaking with reporters outside of the courtroom.

$3M Tesla Showroom in Salt Lake City, UT [Credit: John H]

Tesla built a $3 million showroom in Salt Lake City last year, but hasn’t been able to sell its vehicles there due to state laws that prevent it from selling directly to consumers without going through a dealership. Utah would later propose a change that would potentially allow Tesla to sell direct to buyers however the automaker was prohibited from stocking vehicle inventory. Tesla pulled its support of the proposal saying that the measures were too restrictive if the company was not allowed to hold inventory in the state. Instead, Tesla would take the fight to the Utah Supreme Court.

During Monday’s Utah Supreme Court hearing, attorneys for Tesla contend that Utah law doesn’t block car makers from selling directly, it only blocks car makers from owning a dealership that’s set up as a franchise. Utah’s dealership association disagreed, arguing that Tesla must adhere to state dealer laws.

Justice Deno Himonas questioned the underlying intent of the law. “They’re not franchising to anybody is the point. It’s not McDonalds franchises,” he said. “Tesla’s not selling franchises. It’s Tesla directly.” as reported by local Fox13 News.

The five justices of the Utah Supreme Court questioned the point of the law, and whether it explicitly prevented Tesla from commencing in direct sales efforts. “I don’t know that I see anything in the Utah statutes that would bar direct sales by the manufacturer,” said Justice Thomas Lee.

The Utah Supreme Court took the case under advisement and is expected to issue a ruling over the next weeks to months. The Supreme Court has up to one year to come up with a ruling.

“Ultimately, neither the Department of Commerce nor the State Tax Commission have the final word on the meaning of the statute,” Justice Christine Durham said in court. “Ultimately, this court does.”

Investor's Corner

Elon Musk praises Ray Dalio’s Bridgewater for accumulating TSLA stock

Published

3 weeks ago

February 14, 2025

Simon Alvarez

Credit: Tesla Asia/X

A recent 13-F filing from legendary investor and billionaire Ray Dalio’s Bridgewater Associates has revealed that the hedge fund has added over $62 million worth of Tesla stock (NASDAQ:TSLA) to its portfolio.

Elon Musk has praised the billionaire’s investment in a post on X.

Bridgewater’s TSLA stake:

As per Bridgewater’s 13-F filing, it currently holds 153,589 shares of TSLA, which costs $62,025,382.
The firm added the TSLA shares in the fourth quarter.
Tesla shares gained momentum after its Q3 2024 earnings call, and it only gained more strength after the election of U.S. President Donald Trump.
At the end of 2024, Tesla shares were up 62%, as noted in a MarketWatch report.
Tesla stock is still up 88% over 12 months despite a steep drop over the past month.

Smart move
— Elon Musk (@elonmusk) February 14, 2025

A vote of confidence:

Bridgewater Associates is one of the largest hedge funds in the world, so the firm’s stake in TSLA could be interpreted as a vote of confidence in the electric vehicle maker.
Elon Musk has praised the firm’s investment. In a post on X, Musk noted that Bridgewater’s investment was a “smart move.”
Elon Musk has been quite consistent on his idea that Tesla could eventually become the world’s most valuable company. He emphasized this point during the Q4 2024 earnings call.
“I see a path. I’m not saying it’s an easy path but I see a path of Tesla being the most valuable company in the world by far. Not even close. There is a path where Tesla is worth more than the next top five companies combined,” Musk said.

Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.

Investor's Corner

Tesla (TSLA) gets $475 price target and “Buy” rating from Benchmark

Published

3 weeks ago

February 12, 2025

Simon Alvarez

Credit: Tesla

Tesla shares (NASDAQ:TSLA) have received a “Buy” rating and a $475 per share price target from Benchmark.

Benchmark’s price target is based on 68.2 times its 2028 earnings before interest, taxes, depreciation, and amortization (EBITDA), as noted in a Morningstar report.

Tesla rating:

In a note to clients, Benchmark analyst Mickey Legg noted that Tesla has outlined a path towards more growth through several of its initiatives.
These include Tesla’s work in autonomous driving systems, robotics, and energy generation.
The company could also make more headway into the electric vehicle segment.
“The company has outlined a path for growth with a more affordable vehicle scheduled for 1H25, unsupervised full self-driving as a paid service this June in Austin, TX, and Optimus robot production ramp through 2026 and beyond,” the analyst stated.

$TSLA +1.8% pre-mkt as Benchmark initiates TSLA with a Buy rating and $475 price target. pic.twitter.com/KT6BTTW5kJ
— Gary Black (@garyblack00) February 12, 2025

More potential:

While he sees potential in Tesla, the Benchmark analyst noted that his current model only incorporates vehicle growth.
Thus, there could be “significant potential upside” if the company’s autonomous vehicle program and Optimus are scaled.
“Tesla’s market leadership, near-term catalysts, strong management, and diversified business justify the stock’s market premium,” Legg noted.

Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.

Investor's Corner

Tesla is ‘better-positioned’ as a company and as a stock as tariff situation escalates

Published

1 month ago

February 3, 2025

Joey Klender

The Cybertruck-towed Model Y ad at Hayden Planetarium. Credit: Tesla North America | X

Tesla is “better-positioned” as a company and as a stock as the tariff situation between the United States, Mexico, and Canada continues to escalate as President Donald Trump announced sanctions against those countries.

Analysts at Piper Sandler are unconcerned regarding Tesla’s position as a high-level stock holding as the tariff drama continues to unfold. This is mostly due to its reputation as a vehicle manufacturer in the domestic market, especially as it holds a distinct advantage of having some of the most American-made vehicles in the country.

Analysts at the firm, led by Alexander Potter, said Tesla is “one of the most defensive stocks” in the automotive sector as the tariff situation continues.

The defensive play comes from the nature of the stock, which should not be too impacted from a U.S. standpoint because of its focus on building vehicles and sourcing parts from manufacturers and companies based in the United States. Tesla has held the distinct title of having several of the most American-made cars, based on annual studies from Cars.com.

Its most recent study, released in June 2024, showed that the Model Y, Model S, and Model X are three of the top ten vehicles with the most U.S.-based manufacturing.

Tesla captures three spots in Cars.com’s American-Made Index, only U.S. manufacturer in list

The year prior, Tesla swept the top four spots of the study.

Piper Sandler analysts highlighted this point in a new note on Monday morning amidst increasing tension between the U.S. and Canada, as Mexico has already started to work with the Trump Administration on a solution:

“Tesla assembles five vehicles in the U.S., and all five rank among the most American-made cars.”

However, with that being said, there is certainly the potential for things to get tougher. The analysts believe that Tesla, while potentially impacted, will be in a better position than most companies because of their domestic position:

“If nothing changes in the next few days, tariffs will almost certainly deal a crippling blow to automotive supply chains in North America. [There is a possibility that] Trump capitulates in some way (perhaps he’ll delay implementation, in an effort to save face).”

There is no evidence that Tesla will be completely bulletproof when it comes to these potential impacts. However, it is definitely better insulated than other companies.

Need accessories for your Tesla? Check out the Teslarati Marketplace:

Please email me with questions and comments at joey@teslarati.com. I’d love to chat! You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.