Tesla Motors Inc Could Be Back In Business In New Jersey

Tesla Motors Inc Could Be Back In Business In New Jersey
<a href="https://pixabay.com/users/Unsplash/">Unsplash</a> / Pixabay

A new proposal from two New Jersey lawmakers could allow Tesla Motors Inc (NASDAQ:TSLA) to again sell its vehicles directly to consumers there. NJ.com reports that two state lawmakers there are proposing a bill which would allow the automaker to set up a total of four stores in New Jersey. That’s two more than the automaker had before New Jersey essentially banned its sales model earlier this year.

Compromise for Tesla

Under the terms of the proposal, Tesla Motors Inc (NASDAQ:TSLA) would also have to open a second service station in New Jersey. Currently the automaker has one charging station in the state. Democratic State Assemblymen Lou Greenwald and Tim Eustace are sponsoring the proposed bill. Eustace said they should encourage new technology in the state and that the tax revenue sales of Tesla’s vehicles would bring shouldn’t be handed over to other states. Greenwald is concerned about consumer protection.

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Last month New Jersey’s Motor Vehicle Commission set clarification regarding its rules about auto dealer franchises. That clarification banned Tesla Motors Inc (NASDAQ:TSLA)’s direct to consumer sales model in New Jersey. The automaker said it was the result of “back room dealings” between auto dealers and New Jersey Gov. Chris Christie, as it said it had been working with the commission to come up with a compromise.

The governor’s office had said they told Tesla Motors Inc (NASDAQ:TSLA) representatives that changes to the law must be done in the state legislature. Meanwhile New Jersey auto dealer associations lobbied against Tesla, saying that the automaker wanted to get rid of competition by taking control of distribution. Tesla, however, said the new rule was against free trade.

Tesla strikes back

Tesla Motors Inc (NASDAQ:TSLA) has battled auto dealers in multiple states. One of the company’s main arguments is that franchise dealers will be unwilling to sell electric vehicles because they depend so heavily on maintenance revenue. Electric vehicles require less maintenance than gasoline vehicles. Tesla argues that salespeople would not want to explain to customers why electric vehicles are better than gasoline vehicles because their business mostly revolves around gasoline vehicles.

Greenwald said Gov. Christie and the Motor Vehicle Commission created the problem when they banned Tesla Motors Inc (NASDAQ:TSLA)’s sales model. He said he simply answered the governor’s challenge to find a solution to the problem by creating his proposal.

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