Tesla Motors Inc (NASDAQ:TSLA) has been ordered to shut down its two stores in New Jersey by April 1, reports Mercury News. On Tuesday, the New Jersey Motor Vehicle Commission unanimously blocked the company from selling its cars directly to consumers. The Commission, which includes members of Governor Chris Christie's cabinet, approved a proposal banning automakers from selling cars directly to consumers.
Tesla says New Jersey governor acted in bad faith
Tesla Motors Inc (NASDAQ:TSLA) has sold more than 600 Model S cars in New Jersey since it opened two stores in the state last year. On Tuesday, the electric vehicle maker blasted Gov. Chris Christie's administration in a blog post, saying that Christie has gone back on his word. The Palo Alto-based company said that the administration acted on behalf of a special interest group that is trying to protect its monopoly. That special interest group is obviously auto dealers who don't want Tesla to disrupt their business model.
But Governor Christie's spokesman Kevin Roberts said that Tesla Motors Inc (NASDAQ:TSLA) was fully aware that this day would come. When the Elon Musk-led company opened its stores in New Jersey, it was made clear that Tesla would have to engage the legislature on a bill to bring its direct sales model under New Jersey law. The company has been negotiating with New Jersey officials to gain approval for its direct sales model as it faced opposition from the New Jersey Coalition of Automotive Retailers. The electric car maker said the Governor's office has promised that it would handle the issue through a fair process in the legislature. But the administration went outside the legislative process with a rule proposal that entirely changed the law.
New Jersey third state to completely block Tesla
New Jersey has become the third state to block Tesla from selling its vehicles directly to consumers. Texas and Arizona are the other two states. Surprisingly, Arizona and Texas are among the four states the company is considering for its $5 billion gigafactory. Tesla Motors Inc (NASDAQ:TSLA) is fighting dealers state by state to win or protect its right to sell vehicles directly to consumers. Dealers in many states including Georgia, New York, Minnesota, and Ohio have sought to ban the direct sales model of Tesla.
Tesla Motors Inc (NASDAQ:TSLA) adopted direct sales model because electric vehicles are still a new technology. The company educates car buyers through its stores about the ins and outs of the automotive technology.
Tesla Motors Inc (NASDAQ:TSLA) shares rose 1.50% to $238.03 at 10:38 AM EDT.