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Tesla Officially Appeals New Jersey Direct Sales Ban | DrivingSales News

Tesla Officially Appeals New Jersey Direct Sales Ban

September 19, 2014 0 Comments


We reported last week Tesla Motors will be receiving 1.3 billion in subsidies from the state of Nevada for construction of their new Gigafactory. However, as the silver state has embraced the California-based company, others have not. In New Jersey, the legal battle for Tesla to sell its electric vehicles directly to consumers rages on.

Tesla Motor’s legal team was in New Jersey Court Tuesday, arguing against their direct sales ban in the garden state. Tesla is appealing their ban and NJ Administrative Code 13:21-15, which has been nicknamed the “Anti-Tesla Rule.” Their argument is the New Jersey Motor Vehicle Commission was pressured by The New Jersey Coalition of Automotive Retailers to force their organization to contract with independent franchises to sell to consumers. Tesla alleges they were thus pushed out of their chance to sell vehicles in New Jersey.

Specifically Tesla is challenging their ban on three grounds.

  1. They claim that the MVC relied on the NJ Franchise Practices Act to create the “Anti-Tesla Rule.” Their reasoning is that the FPA was used by the MVC to create the rule but that FPA doesn’t apply to them. Tesla feels that since they aren’t a franchised business the Act has nothing to do with them and they aren’t a party to its regulations.
  2. Tesla claims that the “MVC is not entitled to enforce the FPA.” Their claim is that the Motor Vehicle Commission has limited powers and is a “creature of statute.” Tesla thinks that the MVC doesn’t have the power to enforce the FPA, thus their allegations against Tesla would be on the basis of an Act that they don’t have the power to enforce.
  3. Lastly, Tesla feels that the requirements in the “Anti-Tesla Act” for multiple cars on display and a certain amount of square footage are a violation the NJ state constitution. Tesla simply contends that the MVC has no authority over the FPA thus there should be no “Anti-Tesla Act” since the MVC didn’t have authority to enforce the FPA.

Tesla’s vice president of business development told Automotive News that, “We believe the regulatory action was made in error. We’ve prepared a legal action to deal with that and I’m feeling pretty good about that. “ While this Tesla Exec may feel good, he’s not the only one. Jim Appleton, President of the New Jersey Coalition of Automotive Retailers feels that lawmakers will make the difference on this issue. Appleton said, “ Something may be on the governor’s desk and signed before they (courts) even decide to grant oral arguments at all.” There are currently two bills pending in the New Jersey Senate that would give Tesla the ability to sell at up to four stores in the garden state.

It’s clear this issue isn’t going away anytime soon. Tesla appears ready to fight a state-by-state battle for the ability to sell cars directly to consumers. This effort on their part is consistently of interest to dealers across the nation. We will continue to follow new developments with Tesla Motors in the coming days and weeks.

About the Author:

The DrivingSales News team is dedicated to breaking the relevant and the tough stories affecting car dealers. Have questions for DrivingSales News? Reach the team at news@drivingsales.com.

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