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.

 

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  • Craig Anderson

    These car dealers are nothing but crooks, or they’re a front for Tony Soprano’s family.
    Either way, eff these idiots

  • Imperialist Devel

    Chris Christie is a fat idiot.

  • RussellL

    “..the state believes there’s a public benefit to promoting a separation between automakers and auto sellers.”

    The only people that believe that are the car dealers. Dealers only want to protect their income stream. They provide little or no value to consumers.
    If they were truly beneficial to consumers then they wouldn’t have to resort to high pressure sales tactics.

    “If there’s a warranty issue or recall notice, said Appleton, dealers see a chance to help customers; the manufacturer sees an expense.”

    With or without dealerships, it’s still an expense to the manufacturer. Adding a middleman doesn’t make it better, only costlier.
    That doesn’t sound like a benefit to me.

  • WeaponZero

    “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.”

    No, the state does not believe there is any benefit to separation between automakers and auto sellers. The state believes whatever lobby money tells them to believe. That said, the PEOPLE that the state is suppose to represents do not believe there is.

    Dealers are not in it to help the customer, they are in it to help themselves. They are not running a charity. There is a reason why car dealers have the lowest rating when it comes to honesty and ethics even below that of congress, lawyers and spammers.

  • f2point8

    It’s time for some traffic problems in Short Hills.

  • Stephen Pace

    I predict if New Jersey approves this law, two things will happen: 1) Tesla will convert their existing ‘dealerships’ to ‘galleries’ like how they operate in Texas. This means they won’t be able to discus pricing or help order cars, but they can provide education on the vehicle and point folks to the website for ordering. 2) Tesla will sue the state on the basis of the previously granted dealership licenses. They may well lose at the state level, but hopefully the Supreme Court will take the case given no existing dealers are harmed by Tesla’s model. This will take a few years, but if the Supreme Court rules in favor of Tesla’s model, and I think there is good reason to believe they will, it may overturn many state laws. If this happens, and I hope it does, NJ dealers may have just started the ball rolling on the end of dealerships as we know it. As for the unintended consequences, you only have to look at the Fisker dealer who sued in Massachusetts (and lost) which ultimately helped Tesla to get their first license in MA.

  • Fred Stanley

    Why were the car dealership rules set up a 100 years ago, so the car manufacturers couldn’t price fix. The GM, Ford and Chrysler should be allowed to sell directly as well. Cut out the middleman profit.

  • sociopathic

    The law clearly states that automobiles must be sold through a dealership network, a dealership network which allows for subsequent service (including warranty work) for when an automobile needs it, aside from a simple tire change.

    The Tesla sales staff does NOT have the capacity to repair anything.

    If Tesla can’t follow the law, then it shouldn’t be allowed to do business in NJ.

    • Aaron68

      Tesla has a nationwide network of engineers that work with their sales reps to respond to customers. They have 24 hour roadside assistance and will make house calls. They also have the most technologically advanced cars that make many repairs possible with over the air software updates and no need for a mechanic to be there on site. This isn’t a car that you drive to the dealer for an oil change and transmission flush every few months.

    • Randy

      That law was created to target Tesla. The service centers are usually very close, but not at the same location, because it makes no sense to put a service center in an expensive mall.

      The law is unconstitutional and a violation of federal law.

      • Not My Name

        Not at all Randy, sociopathic is right. The law is that auto manufacturers cannot sell directly to consumers. It is an old law that has run its course. The NADA is very powerful lobby similar in strength to the NRA. In this deregulated market, I’m surprised that things haven’t changed yet.

        • Randy

          The Christ administration changed the rules and told Tesla they can no longer operate… Yes, there are a lot of old dealer protection laws, but they usually dont apply to Tesla, until the laws are changed or the politicians get a big check from the dealers…

  • isaid

    “If there’s a warranty issue or recall notice, said Appleton, dealers see a chance to help customers”

    OMG my sides are splitting! That’s the best laugh I’ve had in a long time.

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  • Sani Fornus

    Dealers are the scum of the earth. They should all fold and go out of business.

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