New Jersey to Shut Down Tesla Sales Outlets in Garden State

Bruce Shipkowski
Associated Press

TRENTON, N.J. — New Jersey motor vehicle officials have approved a new regulation that would require all new car dealers to obtain a franchise agreement in order to receive a state license.

The regulation adopted Tuesday by the state's Motor Vehicle Commission effectively prohibits companies from using a direct sales model, which cuts out the middleman and brings vehicles directly to customers through smaller retail establishments. The MVC's board adopted the regulation by a 6-0 vote, and it will take effect April 1.

Critics say the regulation will hamper the electric car industry's attempts to expand its presence in New Jersey. The regulation was supported by the New Jersey Coalition of Automotive Retailers (NJCAR), which has noted that state law has long required automakers to sell their vehicles through dealers.

California-based Tesla, one of the electric car firms that would be affected by the new rule, called it "an affront to the very concept of a free market," in a statement posted on its corporate website.

Tesla said it has been "working constructively" with the MVC and Gov. Chris Christie's administration since last year to delay the proposal, so it could be handled through "a fair process" in the state Legislature. The company said the MVC and the administration went "beyond their authority to implement the state's laws at the behest of a special interest group looking to protect its monopoly at the expense of New Jersey consumers."

Administration officials disputed Tesla's claims.

"Since Tesla first began operating in New Jersey one year ago, it was made clear that the company would need to engage the Legislature on a bill to establish their new direct-sales operations under New Jersey law," spokesman Kevin Roberts said in a statement issued Tuesday afternoon. "This administration does not find it appropriate to unilaterally change the way cars are sold in New Jersey without legislation, and Tesla has been aware of this position since the beginning."

Tesla currently has two retail locations in New Jersey and has planned to expand here in an effort to sell its electric cars, which retail for around $60,000 before any incentives.