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Tesla Says New Jersey Regulators Can't Stop Direct Sales

Illustration for article titled Tesla Says New Jersey Regulators Cant Stop Direct Sales

In April the New Jersey Motor Vehicle Commission revoked Tesla's dealership licence in the state. Currently there are two pieces of legislation due for a vote in the fall that could allow Tesla to operate. But the automaker claims that the state regulators didn't have the authority to shut down direct sales.


Diarmuid O'Connell, Tesla vice president of business development, told Automotive News, "We believe the regulatory action was made in error...We've prepared a legal action to deal with that, and I'm feeling pretty good about that."


On Tuesday Tesla filed a brief with the New Jersey Superior Court outlining specific reasons why the court should overturn the Commission's ruling -

New Jersey's franchise statute, which regulators purported to rely on, doesn't apply to Tesla because it has no franchisor-franchisee relationships.

The New Jersey Motor Vehicle Commission has limited powers and is not entitled to enforce the franchise statute anyway.

Certain elements of the rule previously have been found to violate the New Jersey Constitution. Those are requirements on minimum square footage, multiple car models on display and on-site servicing equipment.

The primary argument is what many have been saying all along. Franchise laws apply to those manufactures who have franchisee relationships with dealers. Tesla had no prior relationships thus cannot be violating the law. Of course the New Jersey Coalition of Automotive Retailers see things a bit differently.

"It appears that Tesla's best and shortest route to relief is part of a package that addresses both Tesla's concerns and the dealers' concerns." -Jim Appleton president of the New Jersey Coalition of Automotive Retailers.


A bill that dealt only with Tesla's situation passed the state Assembly early this year. The Senate will vote in the fall on another bill that would update the state's auto franchise law. Among the details of that legislation include a provision for four factory-owned Tesla stores, but also requires the brand to have two service facilities, and any fifth store would have to be franchised.


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Photo: Getty

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Imagine if NJ told Apple they have to sell all their products through a dealer, like Best Buy and are not allowed to make sales online or have their own Apple Stores. Maybe that would make the public realize why this is such a big deal