TSLA Tesla Inc

Tesla Motors Inc., facing opposition from the owners of car dealerships, is now eligible to operate its own stores in Richmond, Va., the Virginia Department of Motor Vehicles commissioner ruled on Wednesday.

The decision is an important win for Tesla as it tries to expand sales locations ahead of the introduction next year of a lower-priced Model 3 sedan. Chief Executive Officer Elon Musk has said the $35,000 car will take Tesla's production to 500,000 in 2018 from about 50,000 last year.

States have dealer-franchise laws protecting independent retailers from competition from manufacturer-run stores. Tesla has managed to win approval to sell direct in many states, including its largest market in California, but key states including Michigan are blocking the Silicon Valley auto maker's attempt.

Virginia law prohibits auto makers from operating dealerships in the state, but the DMV commissioner can rule that because there is no independent dealer in the area, Tesla is allowed to run its own store.

Opponents could appeal in court and Tesla must still get a license from the Motor Vehicle Dealer Board.

Tesla praised the decision, saying it will begin construction of a new store.

"This decision will allow Richmond-area consumers to learn about and purchase their Tesla vehicles in closer proximity to their homes," Diarmuid O'Connell, vice president of business development at Tesla, said in a statement.

Write to Tim Higgins at Tim.Higgins@WSJ.com

(END) Dow Jones Newswires

November 30, 2016 17:45 ET (22:45 GMT)

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