Tesla to Appeal N.J. Ban on Direct Sales

By AutoFOXBusiness

Tesla Motors (NASDAQ:TSLA) plans to appeal New Jersey’s decision to enact a ban on direct sales in the state, as the automaker continues its fight against franchised dealers.

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Last month, the Motor Vehicle Commission in New Jersey altered its rules to require all car retailers to have a franchise agreement with manufacturers. Tesla, which has two stores in the Garden State, must stop selling its Model S sedan directly to consumers by April 15.

The Palo Alto, Calif.-based company filed an appeal with the state’s Superior Court on Wednesday, challenging franchise laws in New Jersey.

Tesla contends that the “MVC’s actions…are not legally permissible and directly harm New Jersey consumers.” The company also believes New Jersey law shouldn’t apply to Tesla, since franchise laws are designed to prevent manufacturers from competing unfairly with dealerships.

“The MVC’s decision to reverse itself, done at the behest of New Jersey’s franchise dealer special interest lobby, exceeded its regulatory authority and circumvented both the New Jersey Legislature and the people of New Jersey,” Tesla said in a statement.

During a town hall meeting in March, New Jersey Gov. Chris Christie blamed the state’s legislature, saying the state had to enforce a law already on the books.

“I have no problem with Tesla selling directly to customers, except that it’s against the law in New Jersey,” Christie said.

The electric car maker and its chief executive, Elon Musk, have long fought against franchise laws. In addition to New Jersey, Texas and Arizona also prohibit manufacturers from using a direct-sales model.

Although Tesla can’t display prices in its stores, car shoppers in those states can place orders online.

Tesla recently came to an agreement with Ohio’s auto dealer group in order to operate up to three company-owned stores. The legislature was considering a bill that would have barred direct sales.

Arizona could also open the door to Tesla’s direct sales, with a bill currently making its way through he legislature. Texas Gov. Rick Perry voiced his support for a similar move in his state. Meanwhile, New York lawmakers proposed a bill that would prohibit automakers from bypassing dealers.

Shares of Tesla, which are up about 50% on the year, were down 3% at $223.49 early Thursday afternoon.

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