After Year-Long Ban, Tesla Is Back in New Jersey
The direct sales model triumphs in the Garden State.
By Kate Taylor •
Opinions expressed by Entrepreneur contributors are their own.
After a year-long battle, Tesla is back in New Jersey.
On Wednesday, New Jersey Gov. Chris Christie signed a bill that allows Tesla and other zero-emission cars to be sold directly to consumers.
The measure comes about a year after the New Jersey Motor Vehicle Commission voted that all new-car dealers needed a franchise agreement to sell vehicles in the state. As Tesla uses the direct sales model, serving both as the manufacturer and distributor of its electronic cars, the company was essentially banned from selling in New Jersey.
Related:Tesla's Direct-Sales Model Banned in New Jersey
For the past year, Tesla fought the decision in New Jersey and other states (such as Texas and Michigan) where the company has faced similar bans. While auto franchisees argue that the direct sales model gives Tesla an unfair advantage and fails to offer proper customer protection, CEO Elon Musk has dismissed these criticisms as self-involved attempts to reduce competition.
Musk has maintained that the direct sales model is vital for Tesla, as the company is still growing and presents a potential conflict of interest between selling gasoline and electric cars in auto franchises. However, some industry professionals believe that as Tesla gets bigger and exits "startup mode," the company may adopt a hybrid business model that allows the company to franchise on a state-by-state basis or adjust to meet certain aspects of existing auto franchise regulations. Ultimately, if other states follow New Jersey's lead and make legal adjustments for Tesla's benefit, a new business model may not be necessary for the electric car company to continue to grow.
Related: Will Tesla Have to Franchise?
