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Unanimous Vote Brings Tesla Closer to Sales in New Jersey

Tesla's fight to sell direct to consumers in New Jersey appears close to ending.

by / June 18, 2014

Tesla Motors is one step closer to selling cars in New Jersey again.

After passing a committee bill on June 5 to lift the direct sales ban on Tesla Motors vehicles, the New Jersey assembly voted unanimously on June 16 to allow such sales. The vote must now be approved by the state Senate, but if approved would allow the automaker to sell directly to the public at four showrooms -- on the condition that the company operate at least one service center.

Several states, including Texas and Arizona, also prohibit direct sales of automobiles, and dozens of other states place restrictions on direct sales. Supporters of direct sales restrictions and bans argue that direct sales are a threat to the auto economy that is largely supported by dealers.

In Texas, Tesla operates a gallery in Houston and another in Austin, but employees there aren’t allowed to tell visitors how much the car costs, or to direct visitors to the company’s website, nor offer a test drive. Cars purchased from Tesla are delivered by a third party in a truck that is not allowed to have Tesla markings.

In North Carolina, Tesla sales are prohibited except through franchised dealers. An official from the North Carolina Automobile Dealers Association argued that the prohibition is a form of consumer protection, because dealers have invested in serving consumers. Dealers argue that they’re trying to prevent unfair competition.

The National Automobile Dealers Association (NADA) is now running a campaign advocating for the dealer sales model, which argues direct vehicle sales are harmful to consumers. A consultant hired by NADA argued that direct sales experiments by Ford and General Motors have been unsuccessful and proved the need for a dealer model.

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