Last month, the New Jersey Motor Vehicle Commission (NJMVC) issued a ruling that Tesla could not continue its direct-to-consumer sales at its two factory-owned New Jersey stores. Now, according to Automotive News, Tesla has filed an appeal to overturn the ruling, continuing the fight between Tesla CEO Elon Musk and the laws which currently favor the franchised dealer model followed by all other automakers in the U.S.
Tesla’s argument against the ruling centers around the fact that the NJMVC licensed the two Tesla New Jersey locations in 2012 in accordance with the law saying that car manufacturers may not sell directly to consumers if this competes directly with dealership franchises selling their cars. Because Tesla does not have any dealership franchises whatsoever, the company’s direct-to-consumer model is not in violation of this rule because the factory-owned stores do not have any franchise dealerships with which to compete.
On the other side of the coin, representatives from the New Jersey Coalition of Automotive Retailers claim that Tesla’s direct-sales model means that the company is violating state laws that promote price competition between dealers. The president of this organization, Jim Appleton, said in a statement regarding to the appeal: “We are confident that the courts will recognize the compelling state interest in regulating the sale and distribution of new motor vehicles and that Tesla’s legal challenge of the NJMVC rules will fail. No one wants to see Tesla out of business in New Jersey. But the NJMVC must fairly and equitably enforce the law and Tesla should be required to play by the same rules as everyone else.”
New Jersey is not the only state where Tesla has sparred with dealerships and lawmakers. In Arizona, Colorado, Virginia, and Texas, sales of Tesla vehicles are outright banned, whereas the company has achieved a compromise in states including Ohio and New York which allows its stores to stay open.
Stay tuned for more news about Tesla’s appeal of the NJMVC’s recent ruling.