Tesla Motors Inc: New Jersey Laws Can’t Ban Our Sales Model

Tesla Motors Inc (NASDAQ:TSLA) claimed in a filing Tuesday that New Jersey regulators lack any authority to ban direct sales at the company’s stores in the state. The EV manufacturer is arguing against amendments made in March by the New Jersey Motor Vehicle Commission, under which the company was restricted from selling vehicles as of Apr. 15 when their license expired.

Will Tesla be given time to present its case?

However, one of the top representatives of dealers in the state said that the issue will reach a settlement before Tesla Motors’ regulatory challenge is even heard.

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“Something may be on the governor’s desk and signed before they even decide to grant oral arguments at all,” said Jim Appleton, president of the New Jersey Coalition of Automotive Retailers.

The Palo Alto-based EV manufacturer, which filed for the appeal back in March, pointed out various reasons in Tuesday’s brief as to why the Superior Court of New Jersey should review the commission rules. Diarmuid O’Connell, Tesla’s vice president of business development, told Automotive News that the company believes that the regulatory action was made in error, and Tesla has prepared a legal action to “deal with that, and I’m feeling pretty good about that.”

Arguments from Tesla

Within the filing, the company mentioned that the franchise norms upon which regulators are depending do not hold good for Tesla because it has no franchiser-franchisee relationships. In its second argument, the company mentioned that the New Jersey Motor Vehicle commission has limited authority and cannot bind the company through franchise statute anyway. The automaker also argued that various points in the rules, such as minimum square footage, multiple car models on display, and on-site servicing equipment, violate the New Jersey Constitution.

Tesla currently operates two stores in New Jersey, and two bills that are pending in the State Senate that, if passed, will allow the company to operate and sell through four stores in the state. One of the two bills is concerned with the Tesla issue and was passed in the State Assembly earlier this year. Another bill will also make desired changes to the state’s auto franchise law.