The two Tesla stores in New Jersey might soon be locking up their doors, after the state’s Motor Vehicle Commission unanimously approved a proposal yesterday that blocks the electric-car maker from selling vehicles directly to customers.
Instead of working with franchised dealers to sell its cars, Tesla works on a direct model that allows customers to decide what kind of Tesla they want, order it and buy it from the company.
Tesla says this whole thing was a surprise to the company, and that it only learned a day before the vote after some time spent going back and forth, that this could be coming.
Tesla’s CEO Elon Musk wrote in a company blog that Governor Chris Christie — who has cabinet members on the New Jersey Motor Vehicle Commission — “has gone back on his word.” He writes that there had been an expectation that the regulation would get “fair process” in the legislature.
“The Administration has decided to go outside the legislative process by expediting a rule proposal that would completely change the law in New Jersey,” he writes. “This new rule, if adopted, would curtail Tesla’s sales operations and jeopardize our existing retail licenses in the state. “
He adds that the two stores in New Jersey may shut down as soon as today, “under pressure from auto dealers.”
But a Christie spokesman says this shouldn’t be a surprise to Tesla.
“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,” said the spokesman, via Bloomberg. “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.”
The president of the New Jersey dealer association says Tesla either needs to change to fit the law or try to make changes.
The New Jersey “statute is on the books to protect consumers,” he said, while “Tesla’s business model crushes competition.”
Tesla’s legal team says the company is already talking to state lawmakers about amending the law and is also mulling litigation. It’s worth pointing out that not only do many New Jersey residents shop for cars in the state, but it’s also an important market for New York City sales.
“New Jersey is one of our larger markets for Model S and so it’s an important market for us,” a Tesla lawyer said. “But really, any market is an important market for us.”
Auto dealers in states like Ohio, New York, Minnesota, Georgia and North Carolina have all made similar efforts to block Tesla, saying its better for shoppers to go through independent retailers instead of company stores. Which, while cars are certainly not iPads, this conjures up a scenario where licensed Apple product resellers might claim only they should sell iPads, not Apple stores.