NJ governor challenges lawmakers
Tesla Motors Inc (NASDAQ:TSLA) got into a very public spat with New Jersey Gov. Chris Christie when the state ordered it to stop selling its cars there. At issue is the automaker’s direct to consumer sales model, which removes dealerships from the equation. Tesla has been battling auto dealerships in multiple states because of its business model.
When Tesla Motors Inc (NASDAQ:TSLA) was initially banned from selling its cars in New Jersey. Gov. Christie said he was only enforcing a law from the 70s that required cars to be sold through dealerships. He then challenged the state legislature to change the law and make it so that Tesla could sell its cars directly to consumers in the state.
Tesla to expand in New Jersey
Tesla Motors Inc (NASDAQ:TSLA) had been selling cars through its two stores in New Jersey, but about 45 days ago, the Motor Vehicle Commission ordered it to stop sales and close up shop in the state. However, this new bill will enable Tesla not only to resume sales at its two previous locations but also open two additional stores in New Jersey. It would also require the automaker to open at least one facility where Tesla would do repairs on its cars.
The state’s lawmakers overwhelmingly approved the advancement of the bill, voting four to zero. A spokesperson for the New Jersey Coalition of Automotive Retailers provided a statement after the vote saying that lawmakers should eventually require Tesla Motors Inc (NASDAQ:TSLA) to use dealerships in the state.
Tesla may have to conform one day
He said they think it’s fair for Tesla to have “reasonable period of time to ramp up operations” before being required to start using dealerships like all the other automakers. Indeed, lawmakers could one day require Tesla to conform. Republican State Sen. Brian Rumpf said although he voted for the bill, he thinks traditional dealerships could be hurt down the road if Tesla does become a major player in the industry.
He thought there should be some kind of time limitation in the bill, although those who fully support the bill point out that it only allows Tesla to have four locations, so there is still a limitation placed on the automaker.
Meanwhile the battle between Tesla Motors Inc (NASDAQ:TSLA) and auto dealerships continues around the country in various states. The Federal Trade Commission recently spoke out in support of Tesla’s sales model, saying in April that it’s bad policy to keep the automaker from selling directly to consumers. Regulators with the agency said the sales model offers consumers more choices, which has always been what the U.S. free market has been about.