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Tesla Appeals MVC Ruling That Stops It From Selling Cars Directly to Drivers

Some clean-energy advocates wonder why state is trying to stop maker of luxury electric cars from selling vehicles in New Jersey


Tesla Motors Inc. isn’t going down without a fight.

The maker of high-priced electric vehicles is appealing a decision by the New Jersey Motor Vehicle Commission that would force Tesla to stop selling cars directly to drivers.

The ruling earlier this month by the state agency has spurred widespread criticism from clean energy proponents, and even free-market advocates, who question why New Jersey is proposing to stop the sale of vehicles that could help reduce pollution and undercut an effort to promote cleaner-running cars.

The issue reflects a long-running dispute between Tesla, which wants to sell its cars directly to consumers, and the New Jersey Coalition of Automotive Retailers, which argues that the auto manufacturer is ignoring state laws requiring vehicles to be sold through licensed franchises -- typically retailers who are members of that trade organization.

Tesla filed an appeal of the MVC decision in the appellate court of the Superior Court late last month seeking to overturn an action by the agency that would lead to the closing of its two stores in New Jersey where consumers can directly buy its electric vehicles.

“The MVC’s actions, which ban Tesla from selling cars direct to consumers through its stores in New Jersey, are not legally permissible and directly harm New Jersey consumers,’’ the company said in a statement issued by its press office.

The New Jersey Coalition of Automotive Retailers, which pushed the state to prohibit Tesla from selling its cars directly, said the company’s challenge of the agency’s rules would fail.

“Tesla’s attack on the franchise system fails to recognize that it has been mandated by law in New Jersey -- and at least 32 other states across the nation -- because this extensive network of independent franchisees promotes vigorous price competition and protects the public interest in highway safety. The Tesla business model, on the other hand, eliminates price competition and limits consumer access to warranty and safety recall services, which has a detrimental impact on public and highway safety,’’ said Jim Appelton, president of the association.

Tesla produces luxury electric vehicles acknowledged by many as the most advanced zero-emission cars in the marketplace, with a range far exceeding most other alternative-fueled cars, making it more appealing to drivers concerned about so-called range anxiety. It comes at a steep price, however. Prices for the vehicles can range from $60,000 to $100,000, although Tesla is hoping introduce a lower-priced model soon.

In its appeal, Tesla said the MVC repeatedly frustrated its efforts to sell its cars in New Jersey, granting only one-month extensions to its two stores in malls in Paramus and Short Hills, and never acting on its application to open a third store.

“Tesla’s mission is to accelerate the advent of sustainable transportation by bringing compelling electric vehicles to the mass market and being forced to use franchise dealers would be detrimental to that message,’’ according to the lawsuit.

In response, the MVC has argued that it is obligated to enforce existing statutes requiring a minimum square-footage of retailer space and display areas. Christie administration officials also have said they repeatedly warned Tesla that if it wanted to sell its cars directly to consumers, it needed to convince the Legislature to make changes in the law.

In the wake of the dispute, lawmakers have introduced bills to do precisely that. Identical bills have been introduced in the state Assembly and Senate that would change the law to allow electric-car manufactures to sell their vehicles without going through franchised retail dealers.

The dispute comes at a time when clean-energy advocates have been frustrated with efforts to promote the use of electric vehicles in New Jersey. Emissions from motor vehicles are the largest source of greenhouse gases in New Jersey that contribute to global climate change.

Jeff Tittel, director of the New Jersey Sierra Club, argued Tesla may have a good case. “Why are we regulating this?’’ he asked. “It’s a restraint of trade.’’

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