Tesla Motors has achieved a victory for its sales model in one of the states it has been battling. The company was banned from directly selling its electric cars in New Jersey, but now the year-long ban has been lifted.
A win for Tesla
The Palo Alto, Calif.-based automaker was granted permission by New Jersey Gov. Chris Christie on Wednesday to open a maximum of four stores and a service center that will enable it to sell directly to customers.
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“With this new law, @TeslaMotors can now establish direct sales operations directly to NJ consumers,” Christie said in a tweet.
Tesla Motors was barred from selling electric cars directly to consumers through a regulation that was passed last year under lobbying pressure from the New Jersey Coalition of Automotive Retailers.
Battle between Musk and dealers
New York, California and Florida are the largest luxury car markets in the U.S., followed by New Jersey in the fourth position. There is a rise in demand for Tesla’s Model S sedans in the U.S. The majority of the states require automakers to sell their cars through third party dealerships, and this has led to a tiff between Tesla Motors and the traditional auto industry.
Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk is of the opinion that standard automobile sales procedures should not be applied to electric vehicles, which have been introduced to the market much later than when the traditional sales method began. Musk has accused car dealers of up-selling to customers products that are not useful to them or are highly expensive to earn them high commissions. Such practices only benefit the dealers and not the customers, and hence are criticized by Musk. The Tesla CEO wants to sell his cars through specialized stores like how iPhone maker Apple sells consumer technology.
“This [sales] model is not just a matter of selling more cars and providing optimum consumer choice for Americans, but it is also about educating consumers about the benefits of going electric,” Musk said last year regarding New Jersey’s initial ban.
On Wednesday, Tesla Motors Inc (NASDAQ:TSLA) shares closed up 3% at $200.71.