Menu

NJ bans Tesla from selling cars directly to consumers

Tesla Motors is getting unplugged in New Jersey.

The state’s motor vehicle commission voted Tuesday to ban automakers from selling cars directly to consumers, instead requiring them to work through franchised dealers, a rule supported by the New Jersey Coalition of Automotive Retailers (NJCAR.)

Tesla now has until April 1st to cease sales operations at the two showrooms the company operates in the state, according to Bloomberg.

Prior to the vote, Tesla CEO Elon Musk accused New Jersey Governor Chris Christie’s administration of reneging on an agreement to delay any changes to the regulations until the topic could be taken up by the state’s legislature, rather than a rulemaking body.

But a Christie spokesperson put the onus on Musk, telling Automotive News that “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.”

If the rule goes into effect as planned, New Jersey will become the fifth state to ban Tesla’s direct sales model, while several others are considering following suit. In such states, the company's "galleries" are not only restricted from selling the cars themselves, but also from giving out information on how to purchase them.

The commission added requirements that dealerships maintain showrooms of no less than 1,000 square feet, with room to display at least two vehicles and have service centers attached. Tesla showrooms, such as the one in New Jersey’s Short Hills mall, are typically separate from the company’s centralized service centers.

Musk called the process “an affront to the very concept of a free market,” while NJCAR President James Appleton, told Bloomberg that the “statute is on the books to protect consumers,” he said, while “Tesla’s business model crushes competition.”

Test Drive: Tesla Model S P85