Tesla Motors appeals sales ban in New Jersey

Thu, Apr 3 2014

Resistance to the way Tesla Motors sells its cars - directly to the consumer, with no negotiating and no dealer middleman - comes mostly from dealership organizations around the country. It's also illegal in some states, thanks to laws ushered into place with help from dealers. The reaction to Tesla's new style of business is led by what Steve Blank calls, "rent seekers" or "landlords of the status-quo." Tesla itself isn't into that sort of name-calling, but it will take to the courts when necessary.

Case in point, New Jersey, where the legislature voted in mid-March to stop Tesla stores from selling cars starting April 1. This week, the New Jersey Motor Vehicle Commission (MVC) extended a deadline until April 15, a move that could save the EV automaker's future in the state. Tesla has now filed with the state Superior Court asking that the ruling be appealed.

Tesla says that the MVC is taking its orders from the state dealers association, the New Jersey Coalition of Automotive Retailers. Tesla also made an argument against the traditional gasoline vehicle dealers that we've heard before. Here is some of the text of the appeal:

Franchise dealers have an inherent conflict of interest in selling electric vehicles. In order to do so effectively, they would need to enthusiastically tout the reasons why electric vehicles are superior to gasoline vehicles. This is not something that they are going to do since gasoline vehicles represent virtually all of their revenue. Dealers also depend on quick, high volume sales - incentivized by substantial sales commissions - in large, out-of-the-way facilities that contain large inventories of new and used cars. By contrast, Tesla sells its cars in relatively small showrooms, often located in shopping malls (like the two stores in New Jersey) that invite people unfamiliar with electric cars to drop in.

You can read the full appeal in the PDF below. The TSLA stock price rose after the appeal was filed, but has since leveled out.

Tesla vs. New Jersey Auto Dealers Superior Court Appeal by AutoblogGreen

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By Sebastian Blanco