New Jersey car dealers: Tesla never should have been allowed to operate in the Garden State

Tesla Motors has two gallery stores in New Jersey: at the Garden State Plaza in Paramus and at the Short Hills mall. The Palo Alto maker of the all-electric Model S sedan has been selling cars in New Jersey for roughly a year and a half, and the state has emerged as a key market in terms of U.S. sales.

But Tesla is fighting the New Jersey Coalition of Automotive Retailers and the administration of Republican Gov. Chris Christie over the right to continue to sell its cars through its direct-sales model. Tesla has faced this battle in many states and has said car dealers are coordinating efforts to hinder sales.

On Tuesday afternoon, the New Jersey Motor Vehicle Commission is expected to approve a rule that would require all new-car dealers to have a franchise agreement in order to receive a license from the state. Tesla sells its cars directly and does not use a dealership model, in part because electric vehicles are still a new technology. Tesla feels that consumer education – direct from the manufacturer – is key.

In a blog post, Tesla said it had been negotiating in good faith with all the parties involved; Tesla’s current license to sell cars in New Jersey expires at the end of March. Then things apparently fell apart.

“Unfortunately, Monday we received news that Governor Christie’s administration has gone back on its word,” said Tesla. “The Administration has decided to go outside the legislative process by expediting a rule proposal that would completely change the law in New Jersey. This new rule, if adopted, would curtail Tesla’s sales operations and jeopardize our existing retail licenses in the state.”

Jim Appleton, president of NJ CAR, says Tesla never should have been granted the right to sell cars in New Jersey in the first place because the state believes there’s a public benefit to promoting a separation between automakers and auto sellers. If there’s a warranty issue or recall notice, said Appleton, dealers see a chance to help customers; the manufacturer sees an expense.

“The jig is up,” said Appelton in an interview Tuesday. “Someone at the New Jersey Motor Vehicle Commission screwed up and issued Tesla licenses, and they never should have. Tesla has been allowed to operate for a year and a half, when they shouldn’t have been operating at all. Tesla is accusing everyone in the world of backroom dealing, yet they indicated they had backroom discussions that led them to believe they could continue to operate.”

New Jersey, one of the wealthiest states in the country, is a key market for Tesla. According to Jessica Caldwell, an analyst at Edmunds.com, New Jersey had 642 registrations in New Jersey through January 2014.

Photo of a Model S sedan from the Tesla Motors website.

Dana Hull Dana Hull (220 Posts)

Dana Hull covers clean technology and energy policy for the San Jose Mercury News. She often writes about electric vehicles, the smart grid, the solar industry and California energy policy, from RPS goals to Gov. Jerry Brown's big dreams for distributed generation.