New Jersey became the third state in the country to block the sale of Tesla Motors’s electric vehicles on Tuesday. The move comes in the form of prohibition of direct sales, as opposed to through independent auto dealers or franchises. Shares of the company dipped 1.85 points in response to the Motor Vehicle Commission's action.
A spokesperson for Governor Chris Christie said in a statement, “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.” The commission that instated the block is composed of three members of Christie’s cabinet and four appointed by the governor.
Tesla currently only has two retail locations in the state to sell its $71,000 electric car, but New Jersey’s high population density and proximity to New York make it a potentially lucrative market. It’s a least far more lucrative than Arizona and Texas, where direct sales have also been banned.
Tesla Motors head Elon Musk described the company as blindsided by the expedited meeting that led to the rule’s passage. He wrote that it is “subverting the democratic process.”
In a blog post on its website, Tesla said:
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. This is an affront to the very concept of a free market.
They also claimed that “we were only able to obtain information about today’s meeting with less than 24 hours notice and in direct contravention of assurances by the Governor.”
On the flip side of the argument is the New Jersey Coalition of Automotive Retailers (NJCAR, haha, get it?) who are committed to protect the traditional dealership sales model. They spent $155,000 in lobbying efforts last year in attempts to block direct sales.
Maybe it's time to get started on that hyperloop.