Bill Would Let Tesla Keep Selling Cars in New Jersey

The bill would add electric cars to a part of the existing law that exempts minority business owners from the requirement to sell new cars through a franchisor.


A New Jersey legislator is trying to make it legal for a car manufacturer to sell directly to consumers in the state, a week before Tesla Motors Inc. has to stop doing so at two New Jersey showrooms.

A bill introduced by Assemblyman Timothy Eustace, a Democrat, would amend the current law, which prohibits a manufacturer from selling directly to consumers. New Jersey requires cars to be sold through a franchise.

Despite the law, the state granted Tesla licenses to operate two showrooms to sell cars directly. But on March 11, the state Motor Vehicle Commission amended its regulations to effectively bar Tesla from making direct sales as of April 1.

Tesla, which has criticized Gov. Chris Christie’s administration for the action, has said it will keep the showrooms open to display its cars, but consumers would have to buy the cars online or in New York, Pennsylvania or elsewhere.

No hearings have been set for the legislation, which was introduced Friday, and it is very unlikely to move before Tesla has to stop making direct sales on April 1.

“How does sending business to other states help New Jersey’s economy?” Eustace, who drives a Nissan electric car, said Monday.

He said that he was moved to act by what he saw as a stifling of an American manufacturing success story. The bill adds electric cars to a part of the existing law that exempts minority business owners from the requirement to sell new cars through a franchisor, he said.

“We claim we want to support America’s entrepreneurial spirit,” he said. “Tesla got federal loans as a startup. It paid them back in record time. They have been in the black since last year. We really don’t want to thwart an American company.”

Tesla says the newness and technology of its cars mean the existing franchise dealership model, with its emphasis on a high volume of sales, does not work. But dealers say the franchise requirement ensures competition and protects consumers in cases of after-sale safety issues and recalls.

James B. Appleton, president of the New Jersey Coalition of Automotive Retailers, said he had not had a chance to read the legislation, but his organization would oppose an effort to weaken the current law.

“We support the franchise system. Anything that can create an exemption from the franchise system for electric cars or any other kind of vehicle, we would oppose,” he said. “Because we believe the franchise system supports the public interest and price competition, and highway safety.”

Christie has declined to say much about the case, or how Tesla obtained its licenses, but has said the company knew that it would need to go to the Legislature to change the law if it wanted to sell cars directly to consumers.

Eustace, whose district contains one of the state’s Tesla showrooms, criticized the governor’s position.

“The governor talks a big game about attracting innovative businesses to the state, but this move does the exact opposite,” he said. “We need to attract companies that will create jobs and promote economic growth. If the governor is unwilling, then the Legislature will get it done.”

©2014 The Record (Hackensack, N.J.)