Tesla's Direct-Sales Model Banned in New Jersey In a victory for auto franchises, Tesla Motors has lost its right to sell vehicles in New Jersey.
By Kate Taylor
Opinions expressed by Entrepreneur contributors are their own.
New Jersey has emerged as the latest state to ban Tesla's direct sales model, passing regulation Tuesday that prohibits the sale of Teslas directly to customers.
The New Jersey Motor Vehicle Commission voted today that all new-car dealers would have to provide a franchise agreement in order to receive a license from the state – something that runs counter to Tesla's model. Tesla serves as both the manufacturer and distributor of its electronic cars.
"We strongly believe it is vital to introduce our own vehicles to the market because electric cars are still a relatively new technology," said Tesla in a statement. "This model is not just a matter of selling more cars and providing optimum consumer choice for Americans, but it is also about educating consumers about the benefits of going electric."
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The new legislation was supported by an association of New Jersey auto dealers. Auto franchisees argue that Tesla's model endangers franchisees who have spent millions of dollars on facilities and inventory and threatens consumers' ability to utilize dealers as advocates separate from manufacturers.
Tesla has struggled with legislation in a number of other states where dealer groups have fought for legislation that would ban Tesla's sales. While Tesla has advocated for lenient legislation in most instances, the company cannot currently sell vehicles directly in Texas and Arizona.
Tesla currently operates two stores in New Jersey, and had plans for more. Tesla indicates that, until very recently, the Christie administration had given its word to the company that anti-Tesla legislation would be delayed until it was handled through the legislative process.
Related: Elon Musk Admits to 'Conversations' With Apple About Tesla
