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Motor Vehicle Commission approves regulations banning Tesla stores in state

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Tesla manufactures a line of electric vehicles that start around $70,000.
Tesla manufactures a line of electric vehicles that start around $70,000. - (Facebook)

The New Jersey Motor Vehicle Commission unanimously voted Tuesday to pass a series of regulations in conflict with Tesla Motors' business model, essentially banning the electric car maker from operating any further in the state.

The regulations require all new cars to be sold by a franchised dealer rather than directly through the manufacturer, which Tesla currently does through corporate-owned stores.

Also included in the regulations are stipulations that all dealerships offer at least 1,000 square feet for their showrooms and maintenance areas. Tesla, however, does not incorporate service centers at each of its stores. For example, the company maintains two New Jersey stores in the Garden State Plaza and Short Hills Mall shopping complexes but only offers service at a separate location in Springfield.

Following the vote, Tesla associate general counsel Jonathan Chang said that it's clear the company was the target of the regulations.

"There's no question this rule was aimed directly at Tesla," Chang said.

With the regulations effective as of April 1, Chang said it is still unclear what will happen to Tesla's New Jersey locations. The company may look to challenge the decision in court, he added.

"You have shown that New Jersey does not believe in free enterprise," Chang said, addressing commission board members directly.

More than a dozen company supporters, many but not all of whom were Tesla owners, spoke before the board to convey their collective disappointment.

Also on hand was James Appleton, president of the New Jersey Coalition of Automotive Retailers, the major supporter of the regulations.

Appleton maintained that NJCAR is "willing and open" to work with Tesla to help it conform its business model to meet state regulations.

Prior to the commission's meeting, Tesla took to the company blog to voice its dismay for the anticipated move. The company says that despite working with the commission and Gov. Chris Christie's administration since last year on coming up with a compromise, it received word that the administration "has gone back on its word to delay" the regulations and move the matter to the Legislature, where it "could be handled through a fair process."

The company claims that, as recently as January, it had been agreed upon with Christie's former Chief Counsel Charles McKenna and new Chief Counsel Chris Porrino that the two entities would air out their issues in the Legislature.

Chang added Tuesday that it is Tesla's belief that Christie's office has been driving the regulations forward.

In an emailed statement, Christie spokesperson Kevin Roberts said the company needed to appeal to the Legislature.

"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," Roberts said. "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."

With two stores already licensed in New Jersey, Tesla claims the new regulations present a "complete reversal" on the commission's stance regarding its ability to operate in the state.

"Indeed, the Administration and the NJMVC are thwarting the Legislature and going 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," the blog post read. "This is an affront to the very concept of a free market."

For Tesla, the opposition is nothing new. The car maker is currently banned in Arizona, Colorado, Virginia and Texas but has come out victorious in fights against similar legislation proposed in Massachusetts, Minnesota, North Carolina and New York.

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Andrew George

Andrew George

Andrew George covers the Statehouse from NJBIZ's Trenton bureau. Born and raised in N.J., Andrew has also spent time as a reporter in D.C., Texas and Pa. His email is andrewg@njbiz.com and he is @AndrGeorge on Twitter.

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Comments


Ray said:
And the NJ State politicians cannot figure out why businesses and citizens are moving to PA, TX and Florida. Even NY is more business friendly.

March 19, 2014 11:28 am

RW Johnson said:
What a sham! Why is NJMVC protecting dealers' interest? Why do we have to pay inflated prices to Dealers? Why can't we directly buy from the Car Manufacturer?

March 13, 2014 9:02 am

Roger Franklin said:
Telsa didn't you see Back to School with Rodney Dangerfield?

First of all you're going to have to grease the local politicians for the sudden zoning problems that always come up. Then there's the kickbacks to the carpenters, and if you plan on using any cement in this building I'm sure the teamsters would like to have a little chat with ya, and that'll cost ya. Oh and don't forget a little something for the building inspectors. Then there's long term costs such as waste disposal. I don't know if you're familiar with who runs that business but I assure you it's not the boy scouts.

This is the Soprano State/Mafia State....where the Democrats and Republicans have become the Mafai. You have to buy off the politicians!

March 12, 2014 10:01 pm

Concerned said:
On the surface this appears to be a case of NJ Politics getting in the way of a better way of doing business. Hmmmm, do you suppose was behind this legislation? Would love to see who was behind the Lobbing effort, an awful outcome, bad judgement on the part of NJ Legislators.

March 12, 2014 3:10 pm

Phil Farrelly said:
This decision by the commission is an affront to the very concept of our free-market capitalism. Who cares if this puts existing car dealers in jeopardy? That's a business risk anyone who operates a business should be prepared to take. What happens when a Burger King owner sees a McDonald's open up across the street? Should we start passing laws to protect businesses who don't plan ahead? It's time the government got out of the way and let the people run their own affairs. I hope that Tesla pursues this in court and that it is found to be an unconstitutional restraint of interstate trade. Our constitution should stand for something. I'm no fan of electric cars and their favored treatment by the Federal government, but this restriction is simply an outrageous exertion of undue influence by a politically connected vested interest, to the detriment of all the rest of us.

March 12, 2014 2:23 pm

CJ said:
Let's keep it simple; if NJ is willing to bow to business middle men who are seeking to increase the price of the car for their own benefit, a profit margin, where there is no added benefit to the consumer, then Tesla should walk away from NJ. I have no issue traveling to another state to purchase a vehicle, or perhaps I can purchase it online!

This action by business groups controlling Trenton should not surprise anyone.

March 12, 2014 10:17 am

David Minno said:
Are you kidding me?

March 12, 2014 10:12 am

Morten Mikkelsen said:
Nice. Way to take a step backwards NJ.

March 12, 2014 9:05 am



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