Tesla’s Latest Spat: New Jersey Expedites Dealer Protection Legislation Vote


“We are disappointed in the actions of the [New Jersey Motor Vehicle Commission] and the Christie Administration, which come on the heels of more than nine months of unexplained delays in the issuing of a new sales license for Tesla, despite our numerous requests, calls, and letters,” Tesla Motors (NASDAQ:TSLA) said in a statement released Tuesday on its website upon receiving word that the administration of Gov. Chris Christie rolled back its decision to delay a proposed anti-Tesla bill that’s backed by none other than the New Jersey Coalition of Automotive Retailers.

Tesla’s spat in New Jersey is by no means unfamiliar territory for the company, which has waged legal battles in several states over its unique business model that involves selling its vehicles directly to consumers and bypassing the conventional dealer format. Naturally, dealers are quite displeased, and groups like NJCAR have spent millions on efforts to put legislative restrictions on the company and prevent Tesla from selling its vehicles in various states.

“The Administration has decided to go outside the legislative process by expediting a rule proposal that would completely change the law in New Jersey,” Tesla said. “This new rule, if adopted, would curtail Tesla’s sales operations and jeopardize our existing retail licenses in the state. ”

Ohio, New York, Texas, and others have seen similar legal appeals, and Tesla’s record with them is fairly mixed. In New Jersey, the fight surrounds Proposal PRN 2013-138, which would put restrictive mechanisms in place “that would, among other things, require all new motor vehicles to be sold through middlemen and block Tesla’s direct sales model,” the company said.

While it’s understandable that the dealer networks are seeking to preserve their model, many see their actions as an affront to the free-market system and a factor in hindering innovative ideas given how much sway they hold at the legislative level. Dealers’ fears are not unfounded, however — if major automakers are also able to bypass dealerships with their own retail locations, it would have a profound impact on the dealership model and big negative connotations for the dealers themselves.

While Tesla was obviously expecting resistance from the NJCAR, it wasn’t expecting to be fighting New Jersey’s legislative body. “[N]either Tesla nor the taxpayers of New Jersey have been able to participate in any of the analysis or been granted a hearing as requested last year when this was first proposed,” the company said on its website. “Despite being the subject of the regulation, we were only able to obtain information about today’s meeting with less than 24 hours notice and in direct contravention of assurances by the Governor.”

The administration is expected to expedite the implementation of a new law “that the Commission intends to stealthily approve” at a meeting in Trenton on Tuesday, Tesla added.

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