Tesla wins direct-sales battle in Virginia

The judge says he is "troubled by the implications of the Tesla business model," however.

Tesla has won a direct-sales battle in Virginia as a judge rules to uphold a Department of Motor Vehicles decision that permitted the company to open a store in the state.

The Virginia Automobile Dealers Association had filed lawsuit challenging DMV commissioner Richard Holcomb's position, arguing that Tesla's business model violates state dealer-franchise laws.

In the latest ruling, Richmond Circuit Court Judge Gregory Rupe acknowledged that the law "gives broad discretion" to the DMV commissioner and the court is limited in its authority to reverse the DMV's decision unless the commissioner acts "arbitrarily or capriciously," according to excerpts posted by the Richmond Times-Dispatch.

"Although this court disagrees with his [Holcomb's] analysis, it has no doubt that the commissioner felt that he is serving the best interests of the people of this commonwealth," Rupe wrote. "And the commissioner's decision is supported by the evidence in this case."

The judge did not completely agree with the DMV's actions, however, noting that he is "troubled by the implications of the Tesla business model" that "artificially creates a situation where it seems no independent dealer could be profitable."

Tesla described the ruling as a "win for consumers who are increasingly looking to purchase electric vehicles" and the company looks forward to growing its business "across the commonwealth."

The dealer lobby group has not decided if it will appeal the ruling.