Tesla is suing to open dealerships in Wisconsin. It's become a big deal in the Supreme Court race

MADISON, Wis. — Tesla CEO Elon Musk and political groups he backs are pouring millions of dollars into the race for a seat on the Wisconsin Supreme Court as the electric vehicle company sues to overturn a state law that prevents it from opening dealerships — a case that eventually could make its way to the high court.

Tesla’s multiple attempts to open its own dealerships in Wisconsin keep running up against a state law that allows only third parties, not auto manufacturers, to operate them. The company filed a lawsuit in January seeking an exemption, just as two Musk-backed political action committees started supporting the Republican-backed candidate, Brad Schimel, over his opponent, Susan Crawford, who is supported by Democrats.

Musk, who is the world’s wealthiest person and is running President Donald Trump’s initiative to slash the size of the federal workforce, has given $3 million to the Wisconsin GOP while groups he supports have funneled more than $17 million into the race. The contributions are part of an extraordinary spending spree in the race, making it by far the most expensive judicial race on record in the U.S. Total spending has eclipsed $80 million with days still to go before the final day of voting on April 1.

Schimel’s critics have accused Musk of trying to buy a favorable ruling for Tesla should the dealership case make it to the state Supreme Court. Here are details of the law and Musk’s lawsuit:

Why can’t Tesla set up Wisconsin dealerships?

State statutes generally prohibit vehicle manufacturers from owning or operating dealerships in Wisconsin and give that franchise to third parties. The law was intended to prevent manufacturers from undercutting independent dealerships.

Nearly 20 states have similar prohibitions, according to the National Conference of State Legislatures. The laws took hold in the 1930s as carmakers started to rely on independent dealerships to sell and service vehicles so they could focus on production. Later, independent dealers wanted to prevent manufacturers from opening their own dealerships and driving them out of business.

Tesla sells its vehicles directly to consumers, who can have their vehicles shipped directly to them or to dealerships in 27 states. Because the company can’t set up its own dealerships in Wisconsin, buyers there must have the cars delivered to them or travel to dealerships in neighboring Minnesota or Illinois to pick them up.

Tesla officials have been working for almost a decade to secure an exemption from the law. Republican legislators introduced bills in 2017 and 2021 that would permit Tesla dealerships, but none of those made it out of the Legislature. They inserted an exemption for Tesla dealerships into the 2019-21 state budget, but Democratic Gov. Tony Evers used his partial veto powers to erase the provision.

The Wisconsin Automobile and Truck Dealers Association has been fighting to preserve the law. Bill Sepic, the association’s president and CEO, told The Associated Press that Tesla should have to follow the law like any other vehicle manufacturer. He said the statutes exist to enable third parties to act as consumer advocates ‘’in making one of the larger purchases of their life.‘’

What is the company doing now?

Tesla filed a lawsuit in state court in January seeking permission to open four dealerships in Wisconsin.

The company argues that independent dealers wouldn’t meet its standards and says selling vehicles at its own dealerships is in the public interest because unaffiliated dealers’ prices are higher and less transparent.

Its lawsuit says that the state law barring manufacturers from running their own dealerships violates economic liberty rights and that the prohibition exists only to protect independent dealers from competition.

The case is pending in Milwaukee County Circuit Court, though no hearings have been scheduled.

The state Justice Department is defending the law. An agency spokesperson declined to comment.

How did Musk get involved in the state Supreme Court race?

Schimel, the conservative state Supreme Court candidate, is vying with Crawford for an open seat on the high court.

The race is the most significant election nationally since the November presidential contest, providing an early barometer for Republicans and Democrats given the intense interest and outside spending it has generated. It also will determine whether the highest court in the perennial presidential battleground state will flip from liberal to conservative control with major cases involving abortion, union rights and congressional redistricting on the horizon.

Eight days after Tesla filed the Wisconsin dealership lawsuit, Musk tweeted: ‘’Very important to vote Republican for the Wisconsin Supreme Court to prevent voting fraud!‘’

To be clear, there has been no evidence of widespread voting fraud in Wisconsin. Democrat Joe Biden’s victory in the state over then-President Donald Trump in 2020 was affirmed by a recount and an independent audit. Trump, a Republican, won the state last November and offered no objections then to the voting or ballot-counting.

According to a tally from the Brennan Center for Justice, Musk-backed groups America PAC and Building America’s Future have spent more than $17 million to support Schimel with ads and flyers. The money he donated to the state Republican Party has been used to help Schimel, who has been endorsed by Trump.

Are the candidates focused on the Tesla case?

Crawford’s supporters contend the timing of the contributions show Musk is trying to ensure that Schimel wins and creates a conservative majority on the court that ultimately would rule in Tesla’s favor. Crawford said during a debate with Schimel this month that Musk ‘’has basically taken over Brad Schimel’s campaign.‘’

Sepic, president of the state dealership association, said Wisconsin should elect the candidate who enforces the prohibition but declined to comment when asked if he thought Schimel or Crawford would do that.

Schimel has repeatedly said he would treat any case involving Tesla the same as any other when he considers whether to hear it or recuse himself. Schimel also has insisted that the donations from Musk and his groups do not make him beholden to them.

Crawford has said the same thing about billionaires who have donated to her campaign, including George Soros and Illinois Gov. JB Pritzker. Soros has contributed $2 million and Pritzker $1.5 million to the Wisconsin Democratic Party, which has funneled the money to Crawford’s campaign.