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New Jersey bans direct sales of Tesla automobiles

Tesla is accusing New Jersey, and Governor Chris Christie, of protecting special interest groups

Financial trends and news by Steven Loeb
March 11, 2014 | Comments
Short URL: http://vator.tv/n/3594

It looks like Tesla is heading toward a big showdown in New Jersey after a vote came down on Tuesday afternoon that will allow for the ban of direct sales of Tesla automobiles in the state, 

The car manufacturer was on the losing end of a vote taken by the New Jersey Motor Vehicle Commission, a spokesperson for the NJMVC has confirmed to VatorNews. The vote was unanimous, six to zero, against Tesla.

By taking this action, New Jersey became the third state in the country to take this kind of measure, following in the footsteps of Arizona and Texas, the two other states that have adopted similar laws in recent years.

What this means for Tesla is that  it can still sell cars in the state, and can also continue to run Tesla stores. But it does not allow customers to buy from those stores; instead those customer will have to go through a third-party dealership in order to purchase the cars.

As you might imagine, Tesla is quite unhappy with this outcome. Even before the vote was handed down, Tesla was already railing against New Jersey and New Jersey Governor Chris Christie in a blog post, in which the company accused the Governor of not acting in "good faith."

"Since 2013, Tesla Motors has been working constructively with the New Jersey Motor Vehicle Commission (NJMVC) and members of Governor Christie’s administration to defend against the New Jersey Coalition of Automotive Retailers’ (NJ CAR) attacks on Tesla’s business model and the rights of New Jersey consumers. Until yesterday, we were under the impression that all parties were working in good faith," the company wrote.

Now, Tesla said, the Christie administration has gone "outside the legislative process by expediting a rule proposal that would completely change the law in New Jersey."

"Indeed, the Administration and the NJMVC are thwarting the Legislature and going beyond their authority to implement the state’s laws at the behest of a special interest group looking to protect its monopoly at the expense of New Jersey consumers," said Tesla. "This is an affront to the very concept of a free market."

According to Tesla, the new rule will have an adverse effect on business, because it will "curtail Tesla’s sales operations and jeopardize our existing retail licenses in the state." 

The company also put out this tweet, in which Tesla accused Christie of going behind the back of the citizens of his state to push the new rule through.

 

So why did New Jersey take this action against Tesla in the first place? Because it said that the company of trying to alter the way the state does business.

This is the statement that Christie administration spokesman Kevin Roberts sent to VatorNews on Tuesday:

"Since Tesla first began operating in New Jersey one year ago, it was made clear that the company would need to engage the Legislature on a bill to establish their new direct-sales operations under New Jersey law," Roberts said. 

"This administration does not find it appropriate to unilaterally change the way cars are sold in New Jersey without legislation and Tesla has been aware of this position since the beginning."

I have reached out to Tesla to find out what steps the company plans to take in wake of the vote. The company was not available for comment, and we will update if we learn more.

Share of Tesla took a small hit on Tuesday, ending trading down 1.85%, or $4.43, to $234.41 a share. 

(Image source: greencarreports.com)

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