Tesla Motors Inc (TSLA): New Jersey bill could reverse ban on direct sales

Posted Mar 26, 2014

A lawmaker in New Jersey has introduced a bill that would let Tesla Motors Inc (NASDAQ:TSLA) continue selling its electric vehicles directly to consumers again. This practice was banned by the state two weeks ago. Assemblyman Tim Eustace introduced the bill following the March 11th vote of the eight-member state Motor Vehicle Commission.

The Motor Vehicle Commission includes members of Gov. Chris Christie?s cabinet. The commission blocked Tesla’s business model in New Jersey, which allowed the auto giant to get around having to use traditional dealerships.

“Because of this new rule, an interested buyer looking for more fuel-efficient, environmentally-friendly vehicle options can go look and ask questions about an electric car in New Jersey, but will have to go to Pennsylvania or New York if he or she actually wants to buy the car,” stated Eustace. “How does sending business to other states help New Jersey’s economy?”

Two of Tesla’s stores in New Jersey will be banned from selling vehicles, starting April 1st. This is when its existing licenses expire. These two locations will stay open as galleries where employees would display Tesla cars and answer questions about the vehicles. The staff members of the vehicles will not be able to discuss the price or complete a sale. People in New Jersey can still purchase vehicles using the Tesla Motors website.

The dealer association said that the commission was simply bringing its regulations in line with long-standing state law that requires franchised dealerships. The association also said that Tesla Motors should have never been granted licenses. On the contrary, Tesla Motors said its licenses were properly granted and should not be taken away. Tesla Motors CEO Elon Musk said that the Christie’s administration went back on its word to delay the regulation. Christie denied the deal and said it was made clear to Tesla that the company would need to lobby the Legislature for a bill to set up its direct-sales operations.

The three bills addressing the Tesla issue have been introduced in the New Jersey Legislature. The New Jersey Coalition of Automotive Retailers president Jim Appleton said he has not seen the language proposed in the bills yet, but the dealers coalition opposes them based on what he knows so far. The coalition is open to accommodations if Tesla Motors can make a case that there is a reason why it cannot operate outside of the franchise system forever.

[Source: AutoNews]