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NJ Hearing Today Could Ban Tesla Stores In State; Electric-Car Maker Cries Foul


Tesla Store Los Angeles [photo: Misha Bruk / MBH Architects]

Tesla Store Los Angeles [photo: Misha Bruk / MBH Architects]

Enlarge Photo

Another battle in Tesla Motors' nationwide war with car dealers seems imminent.

The latest state to oppose Tesla's direct-sales model is New Jersey, which the company says is on the verge of passing rules that would push its direct-sales model out of the Garden State.

ALSO SEE: Tesla Stores Changing Dealer Relationship, Says Ex-Apple Exec At Ford Seminar

A proposed rule change (PDF) expected to be approved at a meeting of the New Jersey Motor Vehicle Commission (NJMVC) at 2 pm today in Trenton would require all new-car dealers to provide a franchise agreement in order to receive a license from the state.

However, since Tesla is both the manufacturer and distributor of its vehicles, that would be impossible: The company could not produce a franchise agreement with itself.

Tesla Store Los Angeles [photo: Misha Bruk / MBH Architects]

Tesla Store Los Angeles [photo: Misha Bruk / MBH Architects]

Enlarge Photo
The proposed rule also requires dealers to maintain facilities of at least 1,000 square feet, with room to display two cars and the capability to service customer cars on site.

This is another problem for Tesla's sales model.

Many Tesla Stores--including its two current New Jersey outlets in Paramus and Short Hills--are located in shopping malls, in spaces much smaller than the average car dealership.

Tesla also operates its service centers in locations that are separate from these showrooms.

The electric carmaker argues that the NJMVC is overstepping its bounds, and that any change to New Jersey's dealer-franchise law should go through the State Legislature.

In the public comments (PDF) for the new rule, the commission argued that such a change falls within its mandate to regulate car sales in the state.

Not surprisingly, the new rule is supported by the New Jersey Coalition of Automotive Retailers (NJ CAR).

DON'T MISS: Ohio Dealers Renew Assault Against Tesla Motors Sales

Tesla said it had been negotiating with NJ CAR on a solution and was blindsided by the NJMVC's move to change the rules to block its sales, let alone on such short notice.

And it's potentially yet another black eye--at least among electric-car advocates--for the embattled administration of Governor Chris Christie, subject of several investigations over the widely publicized closing of entrance ramps to the George Washington Bridge over the Hudson River, apparently for political purposes.

The New Jersey action is the most recent of several attempts to block Tesla's direct-sales model in multiple states.

In Ohio, dealers have encouraged legislation that would explicitly ban manufacturers from selling cars.

Anti-Tesla legislation has been defeated in Massachusetts, Minnesota, North Carolina, and New York, while Arizona, Colorado, Texas, and Virginia do not permit new Tesla company-owned stores to open.

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