While Tesla’s battle with GM over direct sales law in Indiana is grabbing all the attention this week, there’s been a development over the same issue in Utah.

Tesla built a $3 million store in Salt Lake City last year, but the full-fledged store was demoted to a gallery/service center two weeks before opening due to the Utah attorney general’s office ruling that it was against the state’s direct sales law.

Legislators and Tesla have since been trying to find a compromise ever since, but the latest proposal was rejected by Tesla, which now says it will focus on a lawsuit it filed before the Utah Supreme Court, according to the Associated Press.

The new bill would allow Tesla to operate its made-to-order business model, but would also block the automaker from keeping any inventory at the store, which Tesla says it puts unfair limits on its business. It’s also not entirely clear how test drives and sale transactions would be handled under the new proposal, which is likely what bothers Tesla.

Tesla Vice President of Regulatory Affairs Jim Chen on the issue:

“If Utah is really about free markets, if it’s really about innovation, if it’s really about new business models that provide the consumers with choice, why would you restrict that?”

Under the current version of the law, Tesla can service its vehicles in Utah and potential buyers can go to the store to look at the Model S, but they can’t buy, discuss the price or take a test drive from Tesla employees.

The situation will remain the same until Tesla can get a dealership license in the state.

Here you can listen to a Utah state legislator making the argument that Tesla shouldn’t be allowed to let people test drive its vehicles and then buy them online because his wife can’t try products from Amazon before buying them (starts at 34:12):

Hat tip to minuteman_d for finding this unbelievable argument.

Featured Image: Tesla Salt Lake City store via Brian Grimmett kuer.org

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