Tesla Motors Inc (TSLA) Sales Model Approved By NJ Panel

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Tesla will now be able to execute direct sales in New Jersey following the approval of a bill by a State Senate committee on Monday. The new bill will nullify the decision made by the State Motor Vehicle Commission under which vehicle manufacturers such as Tesla were not allowed to sell their cars directly.

Tesla’s sales model approved in New Jersey

MVC rules framed last year required new car dealers to have franchise agreements. Now Tesla will be able to sell cars directly from up to four locations and provide one servicing facility. “This is good for New Jersey. This is good for America,” said James Chen, Tesla Motors’ vice president for regulatory affairs.

Tony Russo, vice president for government affairs of the Commerce and Industry Association of New Jersey, told NJ.com that they stand in support of the bill because they are advocates of free market and believe free market trade should go beyond restrictions to help business and consumers.

The state’s car dealer association has long been opposing Tesla’s direct sales model, but no one from the group spoke at the hearing. Until now, Tesla was allowed only to show its vehicles but not sell them in New Jersey. The rule laid down last year by the State Motor Vehicle Commission claimed the company was violating the state law that requires cars to be sold through dealers. Tesla CEO Elon Musk was so disappointed after the ruling that he posted a blog accusing Gov. Chris Christie of protecting major manufacturers and discouraging innovation.

Lost in South Salt Lake

In New Jersey, Tesla may have won a battle against dealers, but in South Salt Lake, the company’s effort to open a dealership received a jolt after the attorney general rejected their request. A bill supporting direct sales was also turned down by the Utah House.

The bill HB394 was supported by Rep. Kim Coleman, R-West Jordan. Coleman said the bill would have served as an agreement between Tesla and auto dealers but acknowledged the non-cooperative stance of dealers. Coleman believes that by rejecting the bill, Utah will miss on potential revenue employment opportunities that Tesla could have brought.

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