Tesla Sales Banned in New Jersey

Tesla's Model S Tour

Tesla’s Model S Tour

Tuesday, New Jersey joins a list of other states that have banned Tesla’s stores including Arizona, Virginia, Colorado, and Texas. Tesla’s retail stores have been fighting an uphill battle against traditional dealerships for nearly two years with New Jersey becoming the latest state to oppose the American automaker’s direct sales approach.

New Jersey state motor vehicle officials have approved a regulation that would require all new car dealers to obtain franchise agreements to receive state licenses, a move critics say will hurt the electric-car industry’s attempts to expand.

The regulation, adopted Tuesday by the state’s Motor Vehicle Commission (NJMVC) by a 6-0 vote, effectively prohibits companies from using a direct-sales model, which cuts out the middleman and takes vehicles directly to customers through smaller retail establishments.  It requires all new-car dealers to provide a franchise agreement in order to receive a license from the state. Since Tesla is both the manufacturer and distributor of its vehicles, it can’t create a franchise agreement with itself, effectively banning the sales of Tesla vehicles from New Jersey.

The regulation was supported by the New Jersey Coalition of Automotive Retailers, which has noted that state law has long required automakers to sell their vehicles through dealers.

According to a statement posted on Tesla’s corporate website:

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.

Unfortunately, Monday we received news that Governor Christie’s administration has gone back on its word to delay a proposed anti-Tesla regulation so that the matter could be handled through a fair process in the Legislature. The Administration has decided to go outside the legislative process by expediting a rule proposal that would completely change the law in New Jersey. This new rule, if adopted, would curtail Tesla’s sales operations and jeopardize our existing retail licenses in the state. Having previously issued two dealer licenses to Tesla, this regulation would be a complete reversal to the long standing position of NJMVC on Tesla’s stores. 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. This is an affront to the very concept of a free market.

Tesla has two retail locations in New Jersey and had planned to expand in the state to sell more of its electric cars, which retail before incentives for around $60,000.

The Tesla sales ban will take effect April 1, 2014.